Fraudulent misrepresentation in contract terms can lead to damages if proven that a party was induced to contract under false pretenses, as established under the Contract Act.

1. The appellant in this appeal is a partnership firm which does the work of building contractors. The respondent is the Gujarat Housing Board (which is hereinafter referred to as 'the Board') and which is the successor to Bombay Housing Board, against which this suit was originally filed by the appellant to recover the total amount of Rs. 2,46,641.06 with costs and interest. The suit was initially filed by the appellant in the court of Civil Judge, Senior Division, Ahmedabad, where it was registered as Jurisdiction Suit No. 65 of 1959. After the formation of the City Civil Court at Ahmedabad, it was transferred to that court where it was registered as Civil Suit No. 295 of 1961.

2. The dispute between the parties relates to two contracts taken by the appellant from the respondent in the year 1956 for the construction of 250 and 176 tenements for industrial labour in Ahmedabad at Mithipur Khokhra Mehmedabad.

3. The record of the case reveals that the respondent Board had undertaken 5 projects for constructing residential tenements for industrial labour at Ahmedabad. All the relevant details of these 5 projects are shown by the learned trial Judge in his judgment in a tabular form. Two of these projects were at Malek Shaban or Bapunagar one at Mithipur, another one at Mithipur Khokhra Mehmedabad, and one at Asarwa all situate in Ahmedabad. For the purpose of suit contracts we are concerned with the 4th project at Mithipur - Khokhra - Mehmedabad area. This project was for the construction of 784 tenements and technical sanction thereof was obtained in the month of August, 1955. This Mithipur - Khokhra - Mehmedabad project of 784 tenements was divided into four groups. Out of these four groups, we are concerned in this suit only with two groups, namely, group 'D' and group 'F'. Group 'D' consisted of 250 tenements while group 'F' consisted of 176 tenements. The appellant - plaintiff has kept the contracts for the construction of these two groups of tenements.

4. In the month of January, 1956 the respondent Board invited tenders for different groups of 784 tenements of Mithipur - Khokhra - Mehmedabad project by notice to contractors. So far as these groups 'D' and 'F' are concerned the said notice is found to be in the following terms :
"Notice to contractors.
Separate sealed tenders for each of the following groups in form 'C' - Tenders for lump sum contract are invited for the work of 'Constructing 784 tenements for Industrial Labour at Khokhara Mehmedabad and Mithipur. Ahmedabad, estimated to cost approximately.

5. This notice obviously invites tenders for "lump sum" contracts as distinguished from 'scheduled rates contracts.' It is an admitted position that 'lump sum' contracts are the contracts wherein a contractor agrees to execute the work within the required specifications and designs for agreed lump sum without reference to the rates. However, in such contracts rates are mentioned and they form an integral part of the contracts, because, these rates are to be worked out for the purpose of evaluating additions and alterations made subsequently in the construction plan.

6. The plaintiff - firm is found to have submitted its tender quotations for group 'D' on 20th February 1956 and for group 'F' on 24th February, 1956. Thereafter, as a result of some negotiations between the parties, the appellant is found to have reduced his quotations for both the groups and it was finally agreed that the appellant should execute the work relating to group 'D' for the amount of Rs. 4,92.150/- and the work relating to group 'F' for the amount of Rs. 3,44,322/-. It is an admitted position that this reduction works out at 0.28 per cent and 0.9 per cent less than the estimated cost to be borne respectively with regard to groups 'D' and 'T'. At Exs. 130 and 131 we find the said two contracts which are in form 'C', and which embody different terms governing these contracts. Reference to these two exhibits shows that they are executed in 'C' form which