Dear Shweta,
It is not that the concerned employee has "taken" advance of Rs.1 Lac from the Co. The fact remains that he had applied for the advance and the Company agreed to give it to him.
I am sure the entire process of asking for the "advance" and "granting" of the same would have been in writing.
Normally at the time of giving such advances (actually it a loan that has been given in this case) it is cearly spelt out that the amount given as loan will be deducted in a fixed number of instalments from the salary of the employee and his consent to the same obtained as a pre-condition to the grant of loan.
In the instant case, the employee's salary is Rs.25,000/- and if you adjust his entire salary against the loan you will actually be putting the employee to severe hardship.
You could, maybe, decide to recover the amount in 10 equal instalments from the salary of the employee. But do put this in writing and get the employee's consent to such deductions.
Someone has talked about the Factories Act and 50% deductions etc....This is not quite right. The Factories Act does not deal with such matters.
Best Wishes,
Vasant Nair