Chitty hypothecation bond was not a borrowing, so statutory relief remained available under the Act.

A chitty hypothecation bond executed by a prized subscriber as security for future instalments did not amount to a borrowing within section 2(c)(xi) of Act XXXI of 1958. Following the binding Full Bench view that such a transaction contains no element of borrowing, the Court held that the statutory definition did not apply and that section 4(2) relief was available. The further contention concerning the source of the initial borrowing was unnecessary to decide once the transaction was found outside the borrowing clause.

---

---

Issues: Whether a chitty hypothecation bond involved a borrowing within section 2(c)(xi) of Act XXXI of 1958 so as to attract section 4(2) of the Act.

Analysis: A prior Full Bench decision had held that in the case of a prized subscriber receiving prize money and executing a hypothecation bond as security for future instalments, there is no element of borrowing. Following that binding view, the Court held that the transaction in question did not answer the statutory concept of borrowing within the relevant clause. In view of that conclusion, the additional contention regarding the source of the initial borrowing did not require decision.

Conclusion: Section 2(c)(xi) of Act XXXI of 1958 had no application to the chitty hypothecation bond, and the appellant was entitled to relief under section 4(2).

Ratio Decidendi: A chitty hypothecation bond executed by a prized subscriber, as security for future instalments, does not amount to a borrowing within the meaning of the statutory relief provision.

---