Explain the rule known as doctrine of indoor management. What are exceptions to this rule?

The doctrine of indoor management, also known as Turquand rule is a 150-year old concept, which protects the outsiders against the actions done by the company. Any person who enters into a contract with the company shall ensure that the transaction is authorised by the articles and memorandum of the company.

There is no requirement to look into the internal irregularities, and even if there are any irregularities, the company shall be held liable since the person has acted on the grounds of good faith. To absorb the concept of this doctrine, it is important to understand the concept of the doctrine of constructive notice.

• Doctrine of Constructive Notice
• Origin of Doctrine of Indoor Management
• Exceptions to the Doctrine of Indoor Management

1. Doctrine of Constructive Notice

Section 399 of the Companies Act, 2013 states that any person may, after payment of the prescribed fees:

– Inspect by electronic means any documents kept with the registrar.
– Require a copy of any document including certificate of incorporation.

In line with this provision, the Memorandum of Association and the Articles of Association are public documents once filed with the registrar. Any person may inspect the same after payment of the fees prescribed.

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