The doctrine of indoor management, also known as the 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.
The doctrine helps protect external members from the company. And indeed, states that it entitles the people to presume that internal proceedings are as per documents with the Registrar of Companies.
EXCEPTION OF DOCTRINE OF INDOOR MANAGEMENT.
If with a minimum of effort, the irregularities within a company could be discovered, the benefit of the rule of indoor management would not apply. The protection of the rule is also not available where the circumstances surrounding the contract are so suspicious as to invite inquiry. And the outsider dealing with the company does not make proper inquiry.
The rule does not apply where a person relies upon a document that turns out to be forged since nothing can validate forgery. However, a company can never be held bound for forgeries committed by its officers.