He gave him zakaah on the basis that he give it back to pay off his debt
Question

                Is it permissible for a person who is owed a debt to give zakaah to the debtor on condition that he give it back to pay off his debt?.
Praise be to Allah.
    It is permissible for a person to give zakaah to someone who 
    owes him money but cannot pay him back, so long as he does not stipulate 
    that he must give it back to him. 

    Al-Nawawi (may Allaah have mercy on him) said in 
    al-Majmoo’ (6/198): But if he gives him zakaah on condition that he 
    gives it back to him in payment of his debt, the giving is not valid and the 
    zakaah is not waived, according to scholarly consensus. End quote. 

    Shaykh Ibn ‘Uthaymeen (may Allaah have mercy on him) was 
    asked: is it permissible for the one who is owed money to give zakaah to the 
    poor person who owes him money on condition that he give it back to the 
    giver to pay off his debt? 

    He replied: If you are owed money by a poor person and you 
    give him your zakaah, there is nothing wrong with that even if he gives it 
    back to you later on, but stipulating that he must do that is not 
    permissible, because if you do that, then we know that you only wanted to do 
    that so that you would get back your money that is owed to you of the poor 
    person, and it is not permissible when paying zakaah to serve one’s own 
    interests or the interests of anyone else. End quote. 

    Majmoo’ Fataawa (18/378). 

    And Allaah knows best.