Company asking to pay gross salary for the relieving letter

Yes, there must be some agreement and/or also at the time of appointment you must have given undertaking that you are abide by rules and regulations of company hence in that case this demand is legal. You have to pay basic+all allowances you can refrain to give travelling allows, medical allows for that you need to give me how salary is comprises basic with other allowances. Give details.

Since you have left without notice, you have to give notice pay.

Please read the offer letter or the bond you have perhaps signed what constitutes the "Pay in lieu ofNotice". 

1. You will have to pay amount equivalent to notice period as agreed vide as per terms of appointment letter. If the notice pay clause is not exibitrd in your appointment letter then need not to pay.

2. In some company's the amount of notice period is being recovered on basic salary. Pl. check what exactly written in your appointment letter. If it is on basic then need not to pay gross salary. 

Yes. The  Company is right in demanding your salary fot the notice period provided there is such an agreement  between you and the Company.

Learned experts/members have given valuable advice. Kindly follow it.

Kindly check your appointment letter. Notice pay @ basic pay, gross pay, CTC must have been described in it. If the company has not mentioned notice pay in lieu of notice period then company can not demand.

However usually companies do not commit such error, therefore  in FNF statement company has demanded gross salary then it should be in line with notice pay described in your appointment letter. Company has also stated in FNF that you may tender notice pay @ gross salary so that relieving letter can be released.

It is believed that amounts payable by you to company are more than amounts payable by company to you, therefore you may tender notice pay @ agreed terms and attach a covering letter to demand for relieving letter, and any other certificate/letter/form etc.  which are still pending to be supplied to you.

I agree with experts.

There is a law which states that generally if  an employee  leaves an Org , without notice or instantaneously with notice, he has to pay three months salary (as defined in his appointment letter) and get the releiving Letter . 

Thus the Company is right .