Doctrine of Indoor Management | Corporate law | Company Law | Reema Baruah (M.Com, LLB)

According to this doctrine, "a person dealing with the company is not presumed to have the knowledge of internal proceedings of the company".

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Doctrine of Indoor Management, also known as the Turquand rule, is a legal principle that protects third parties who deal with a company in good faith. The doctrine essentially states that a third party who deals with a company is entitled to assume that the company's internal affairs are being conducted in accordance with its articles of association and memorandum of association. This means that a third party is not required to inquire into the company's internal affairs, such as whether the company has the authority to enter into a particular transaction, or whether the transaction has been approved by the company's directors.

The doctrine of indoor management is based on the principle of public policy. The law wants to encourage third parties to deal with companies, and the doctrine of indoor management helps to do this by providing certainty and predictability. If third parties were required to inquire into the company's internal affairs, it would be much more difficult and costly for them to do business with companies.

The doctrine of indoor management is not absolute. There are a number of exceptions to the doctrine, including:

If the third party knows or has reason to know that the company is not acting in accordance with its articles of association or memorandum of association.
If the third party is a director or shareholder of the company.
If the third party is a creditor of the company and the transaction is entered into for the purpose of defrauding the creditor.

The doctrine of indoor management is an important legal principle that protects third parties who deal with companies in good faith. The doctrine helps to ensure that companies can do business with confidence, and that third parties can rely on the company's internal affairs being conducted in accordance with its articles of association and memorandum of association.