Can a Public Sector Bank Recover Staff Loans After Termination? Seeking Advice

I was appointed as an officer in a public sector bank. The bank harassed me, and I went on leave. Thereafter, they issued orders for Voluntary Vacation of Service. My appeal was also rejected. They have recovered PF and gratuity for the settling of the staff car loan and staff housing loan. The housing loan is still not fully paid off. Now, they have approached the commercial court for the recovery of the remaining staff housing loan. The property is not yet registered.

Can they recover staff loans after termination?

Loans and advances for certain specified purposes on a long-term basis are sanctioned by employers to employees subject to certain conditions such as their take-home salary, length of remaining service, collateral insurance coverage, etc. Once the loan agreement is signed and sanctioned, an additional contractual relationship of debtor and creditor is created and continues until the loan amount and interest thereof are fully realized by the employer.

When employment suddenly comes to an end and the pending loan amount remains unpaid, the employer, as a creditor, can take legal action for recovery.