Well, for starters, the 10x10 carpet is obviously the one that needs to be cut, because it's the one that's too large for the room.
The 10x10 MUST be cut such that the "cut" section includes but is not limited to a 1x10 section of carpet. Therefore, the cut section's orientation is known-- its 10m edge must be parallel to the 12m side of the room. Therefore, we can also conclude that no portion of the cut section is more than 9m wide, and cannot include any part of the opposing 1x10 section. Thus, the "remaining" section's orientation is also known, because it must similarly contain a 1x10 section of carpet which must be parallel to the 12m side of the room.
As a result, there is a middle 8x10 section where the cut can be made. It clearly must start and end on opposite sides of the carpet, although I'm assuming that the cut may include some curves and/or angles (otherwise I think I can prove that it's impossible).
I believe that it's also true that the known 1x10 sections must be aligned against the 12m walls. If not, the space between the 1x10 section and the wall would have to be taken up by either the *other* 1x10 section, or both the 1x10 section and the 1x8 carpet. It can't be taken completely by the other 1x10 section, because in order to do so, it would have to cover a distance of 10m, which could only be achieved by completely severing the opposing 1x10 section from the middle 8x10 section, thus requiring 2 cuts. If both, it's a little difficult to describe, but it would appear that it's simply not possible-- certain areas would be required to be filled by one 1x10 section of the other which conflict.
Hence, I believe the 1x10 sections MUST be flush against the opposing 12m walls. Also, because the 1x8 section is insufficient to cover an entire edge of the 9m wall, the 1x10 sections MUST be placed in opposite corners, giving each of them opportunity to fully cover the 9m wall.
Unfortunately, this path of logic stops here. By process of deduction, it would appear that this arrangement requires certain areas of the carpet to belong to the respective 1x10 sections which creates an impossible situation. The 1x8 section of carpet is only allowed one of effectively two positions, both of which create the paradox.
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Conclusion: As stated, it would appear impossible to me. I'm not 100% sure of that, but it sure seems that way. If, however, one were permitted to cut EACH carpet only once, it's certainly possible. Similarly, if folds are possible (effectively meaning multiple cuts) there are most likely possibilities.
DaveE