The Doctrine of Indoor Management is one of the most basic and essential doctrine in the Companies Act, 2013. This doctrine means that a person who has entered into a contract with a company has to ensure that the transaction that is being undertaken is authorised by the Articles of Association and Memorandum of Association which is the constitution of the the company. This is also called as Turqaund Rule. This Doctrine acts as a mechanism of the Doctrine of Constructive Notice. The doctrine of constructive notice states that every person has access to articles of association and memorandum of association of a company because there are out in the public domain. Therefore, it protects the company from the claims of the outsiders. The indoor management principle states that a person who is entering into the transaction with a company only needs to see that the transaction is not inconsistent with the articles and memorandum laid down by the company but he is not bound to see the internal irregularities of the company. If there are such internal irregularities of the company then the company will be held liable because the person who entered into the transaction was acting on a good faith.

The reason why this Doctrine was enacted is because what actually happens within a company is not known to the outsiders full stop there for the company by presenting the rule of of constructive notice can escape their liability full stop therefore this Doctrine comes at rescue of the people who on good faith have acted and transacted with the company. This doctrine was laid down in Royal British Bank v. Turquand where Lord Hatherly said that an outsider is bound to know the external position of the company, but are not bound to know its indoor management. Hence, the name Doctrine of Indoor Management.
In India this has been inculcated through Section 20(7) of the Companies Act which states that a company has to comply with all the clauses of Memorandum of Association and only in a situation where a person knew that the company cannot comply with such requirements can this doctrine not be held. In India it was upheld in Lakshmi Ratan Cotton Mills Co. Ltd. v. J.K Jute Mills Co. Ltd.

However, there are certain exceptions to this rule. The exceptions to the Doctrine of Indoor Mangement are as follows:

1. In case a person has the knowledge of certain irregularity within the company or has an actual or constructive notice of such irregularity, they cannot use this doctrine in their favour. This is because it can make a company vulnerable and can be misused against the company.
2. When a person is dealing with a transaction with the company is suspicious about this irregularity, then he or she should enquire into it. If the person fails to enquire then they cannot claim protection under this doctrine. Such excuse is not excusable.
3. Transaction with the company which aare forged are void ab initio because there is no free consent and also involves misrepresentation for such transactions.