For the violation of the model standing orders or the provisions of the appointment letter, employers are expected to conduct the domestic enquiry and if the misconduct of the employee is proved then suitable disciplinary action can be taken. It could be termination from employment depending on the gravity of the misconduct.
In your case did you conduct the domestic enquiry? If not, then it is violation of the principles of natural justice. Since there is violation from your side, the accused employee has retaliated the way he could.
Going further, if the employee is in possession of company property then did yo obtain from him the loan card? What evidence do you have for the transfer of company property?
Now you may send him letter to his home address for the returning of the company's property. Tell him that if he fails to do that then you are free to follow the legal route. In case if he remains intransigent then send the lawyer's notice. If he ignores the lawyer's notice also then lodge a police complaint.
From India, Bangalore
Mr Divekar has correctly replied that the employee is retaliating in his way. Why did your company didn't followed the process of termination? I guess this is done as a matter of non informative of how to proceed such dismissals.
Better way, as an HR, have a word with employee, get his dues cheque ready and exchange the required with mutual consent. Going to police, lodging the complaint etc will only attract disputes and in fight of 2 cats, the monkey will be the winner. I hope you understand my point and peacefully settle the mater.
From India, New Delhi