TITLE:LEGAL ASPECT OF BUSINESS C.NO.

103

DOCTRINE OF INDOOR
MANAGEMENT
 ORIGIN

ROYAL BRITISH BANK

Vs
TURQUAND
(1856)
 FACTS OF THE CASE ARE:
The Articles empowered the Directors to borrow money provided
they were authorized by a Resolution passed at the General
Meeting of the Co.
 POINT DECIDED IS:
The outsiders dealing with the Co. are entitled to presume that as far
as the internal management of the Co. is concerned, everything has
been regularly done.
 “DOCTRINE OF INDOOR
MANAGEMENT”
is also known as
“ RULE IN ROYAL BRITISH
BANK Vs TURQUAND”
DOCTRINE OF INDOOR MANAGEMENT

LORD HATHERLEY:

“Persons transacting business with the Co. are deemed

to have notice of what they would have discovered by
making a search at the office of the Registrar of Co.’s,
and they would be stopped from asserting that they had
not read the documents. But such persons are not
deemed to have notice of, nor are they under a duty
to inquire into the internal proceedings of a Co. .
Thus an outsider is presumed to know the Constitution of
a Co., but not what may or may not have taken place
within the doors that are closed to him.”
 EXCEPTIONS TO THE DOCTRINE OF INDOOR
MANAGEMENT

1. KNOWLEDGE OF IRREGULARITY

2. NEGLIGENCE ON THE PART OF THE OUTSIDER

3. FORGERY

4. NO KNOWLEDGE OF ARTICLES