ORDER Heard counsel for the parties. 2. The original petitioner, who was employee of Bokaro Steel Plant, a Unit of Steel Authority of India Limited, has been substituted by his legal heirs upon his death on 7th October 2011. He is said to have retired on 31st January 2009. 3. He had approached this Court in the present writ application with the grievance that an amount of Rs. 6.00 lakhs was shown outstanding against him in the final settlement statement issued in January 2009 vide Annexure-1 upon retirement of the petitioner. The petitioner had alleged that against his application for New House Building Loan in the year 1997, an amount of Rs. 1,90,000/- was sanctioned to him vide allotment letter dated 11th April 1997 for construction of a new house. He was paid two installments of Rs. 57,000/ and Rs. 76,000/- totaling Rs. 1,33,000/- on 12th August 1997 and 18th December 1997 respectively. The petitioner could not complete the construction of his house and informed the authorities as such. Therefore, the remaining third installment against the sanctioned amount of loan was not issued. Thereafter, the respondent authorities started recovery of housing building advance from the month of February 1999 @ Rs. 1120/- per month towards principal amount and Rs. 330/- towards interest by deducting the same from his salary every month. The last installment was deducted in October 2008. Total amount recovered from the petitioner till October 2008 amounted to Rs. 2,19,991/-, as per statement of repayment contained at Annexure-3 to the writ petition. In the meantime, just before his retirement, he was issued a charge sheet on 24th October 2008 for having not utilized the amount of construction of the house and having contravened the undertaking given by him before withdrawal of the advance. The said charge was replied to by the petitioner and he was imposed with the punishment of censure passed on 13/16th December 2008 vide Annexure-4 issued by the respondent DGM, Bokaro Steel Plant. 4. In the aforesaid background, it is contended on behalf of the petitioner that when the respondents after making regular deductions per month from the salary of the petitioner, realized the amount along with interest totalling Rs. 2,19,991/- by October 2008 against the loan advance of Rs. 1,33,000/- and that he has also been censured for such charges, the final settlement statement showing outstanding of Rs. 2,19,991/- by October 2008 against the loan advance of Rs. 1,33,000/- and that he has also been censured for such charges, the final settlement statement showing outstanding of Rs. 6.00 lakhs against the new house building loan, is wholly arbitrary, illegal and unsustainable in law. It is also submitted that no notice has been issued to the petitioner or his legal heirs before such an amount has been adjusted from his total post retirement dues totalling Rs. 8.73 lakhs. It is submitted that the outstanding loan amount of Rs. 6.00 lakhs shown against the petitioner has been calculated on the basis of imaginary rate of interest. Even the sum of Rs. 2,19,991/- which was already recovered, has also not been adjusted. Therefore, the impugned recovery is wholly unsustainable in law. 5. Learned counsel for the respondents, on the other hand, submits that the petitioner did not complete the construction of the house for which advance was given to him. He suppressed the fact that his son was dependent upon him, while his son was already having some business. In such circumstances, under Rule 5.8 of House Building Rules of the Company, if a employee does not comply with the provisions of the scheme or furnishes wrong or false information or certificate or misused the facility in any form, he would be guilty of misconduct and render himself liable to disciplinary action involving major penalty, apart from incurring the liability to refund the entire outstanding amount of loan together with interest @ 18% per annum to be compounded annually from the date of drawl of house building advance. It is submitted that in such circumstances, after conclusion of vigilance inquiry against the petitioner in which admittedly, he was never noticed, respondents have sought to recover the outstanding building advance amount along with interest @ 18% per annum which comes to Rs. 5,94249/-, as per the statement made in paragraph-17 of their counter affidavit. It is submitted that the calculation of penal interest shown in the chart at Annexure-A indicates that the total interest amount recovered from his salary i.e. Rs. 87,528/- has already been discounted from the total penal interest of Rs. 6,81,777.70. In such circumstances, the petitioner cannot escape from the liability to pay the outstanding loan amount along with interest at the stipulated rate of interest under Rule 5.8 of the Housing Building Advance Rules. 87,528/- has already been discounted from the total penal interest of Rs. 6,81,777.70. In such circumstances, the petitioner cannot escape from the liability to pay the outstanding loan amount along with interest at the stipulated rate of interest under Rule 5.8 of the Housing Building Advance Rules. Therefore, the final settlement statement has also reflected such an outstanding loan amount against the petitioner. 6. Counsel for the petitioner however point out that the allotment order dated 11th April 1997 (Annexure-2) does not show any rate of interest at para-III(ga) which contains the said stipulation. 7. I have heard learned counsel for the parties and gone through the relevant materials on record. In the instant case, as it appears, the whole controversy revolves around the exercise on the part of the respondents to recover the amount of Rs. 5.94 lakhs and odd from the post retirement benefits of the petitioner, on the grounds that he had failed to utilize the house loan advance sanctioned to him in the month of April 1997. The said recovery is being made after his retirement under Rule 5.8 of the House Building Advance Rules which provides that in case of furnishing of wrong and false information or certificate or misuse of that facility or on failure to comply with the provisions of the scheme, the employee shall be liable to disciplinary action involving major penalty and such act shall be treated as guilty of misconduct. Under the said rules, apart from the aforesaid likelihood of disciplinary action against the employee, he is also liable to refund the entire outstanding loan @ 18% per annum compounded annually from the date of issuance of the house building advance. 8. In the instant case, as the facts denote, the House Building Advance was sanctioned in favour of the petitioner on 12th April 1997 for a sum of Rs. 1,90,000/-. The first and second installments, as indicated in earlier paragraphs, were released totalling Rs. 1,33,000/- in August 1997 and December 1997 respectively. Since the petitioner did not complete the construction of the house, he informed the authorities and third installment was not issued. The respondent started recovery of the loan amount @ Rs. 1120 towards principal amount and @ Rs. 330 towards interest by making monthly deduction from his salary since February 1999. Such recovery continued till the amount of Rs. Since the petitioner did not complete the construction of the house, he informed the authorities and third installment was not issued. The respondent started recovery of the loan amount @ Rs. 1120 towards principal amount and @ Rs. 330 towards interest by making monthly deduction from his salary since February 1999. Such recovery continued till the amount of Rs. 2,19,991/- was recovered by October 2008, as per the statement of deductions enclosed as Annexure-3. 9. In October 2008, the petitioner was also asked to show-cause on the charges in relation to the aforesaid allegations of misuse of loan amount and failing to use it for the specified purpose of house building construction. Upon his reply to the show-cause, he was imposed with the punishment of censure on 13th December 2008 vide Annexure-4. It therefore appears that in compliance to Rule 5.8 of the Housing Building Advance Rules, the petitioner faced disciplinary action and was also imposed with a punishment. On account of other conditions stipulated in Rule 5.8 of the House Building Advance Rules,, respondents have chosen to undertake the exercise to realize the entire outstanding amount of loan together with interest @ 18% per annum compounded annually from the date of disbursal of the house building advance. However, the said exercise has been undertaken without any show-cause or notice to the petitioner. On the other hand, respondent themselves have realized Rs. 2,19,991/- from the salary of the petitioner by carrying out deduction from the monthly salary of the petitioner from February 1999 till October 2008. Only interest has been adjusted against the total penal interest i.e. 6,81,777.70 calculated @ 18% per annum and balance amount of Rs. 5,94,249/- is being recovered from the petitioner. 10. It is the contention of the respondents that the principal amount has not been reckoned and calculation has been made from the date of disbursal of first installment and after calculating penal rate of interest @ 18% per annum, figure comes to Rs. 6,81,777.70. However, the chart at Annexure-A to the counter affidavit shows that the interest charged on compound rate has been added to the principal every time and again charged at the same @ 18% compound rate of interest. This is wholly arbitrary and unreasonable. 6,81,777.70. However, the chart at Annexure-A to the counter affidavit shows that the interest charged on compound rate has been added to the principal every time and again charged at the same @ 18% compound rate of interest. This is wholly arbitrary and unreasonable. The aforesaid deductions from the post retirement benefits of the petitioner has been made obviously without any further show-cause or notice to either the original petitioner or his legal heirs. The petitioner had also retired in 2009 and now deceased. In such circumstances therefore, the impugned recovery of the outstanding loan amount on account of new house building loan with interest @ 18% per annum, is vitiated in law on account of failure to comply with the principles of natural justice. Respondents despite being conscious of the fact that the total loan amount was recovered by October 2008, have chosen to undertake such an exercise only after retirement of the petitioner. Therefore, the recovery of the aforesaid amount cannot be sustained in law and it is held to be arbitrary and illegal. It is accordingly quashed. Respondents shall refund the entire amount deducted to the legal heirs of the petitioner, in accordance with law, within a period of twelve weeks from the date of receipt of a copy of this order. The writ petition is allowed.