Indoor Management is also known as 'Tnrquand's Rule

The Doctrine of Indoor Management is also known as 'Tnrquand's Rule', because it had its origin in Turquand's case discussed as follows:
Ro'al British Bank Vs. TurIUand, 1856, 119 ER 886. The directors of the company issued a bond to T. They had power under the Articles to issue such bonds provided they were authorized by a resolution of the company. No such resolution was, however, passed in this case. Held, T could recover the amount of the bond from the company on the ground that he was entitled to assume that the resolution had been passed.
The rule is based upon obvious reasons of public convenience and
justice as the intimal proceedings of a company are not open to public and it will not be possible for outsiders to know them. Thus, they can presume that the company follows its intimate rules and regulations properly and they need not investigate in this regard.
.Exceptions to the Doctrine of Indoor Management. No doubt that t he Doctrine of Indoor Management is of great practical utility and has also been applied in a variety of cases involving rights and liabilities of the companies and the outsiders, yet it has the following exceptions. i.e., a
person dealing with the company cannot take the benefit of this doctrine in the following situations:

Negligence. Similarly, where the circumstances are of a suspicious nature and the person has failed to enquire into it, he shall not be entitled to protect under this Rule. Thus, in Undenvood Vs. Bank of Liverpool, the sole director of the company in this case paid into his own account cheques drawn ip favour of the company. Held, the bank was liable as it ought to have made proper enquiries before crediting tile account of the director. No Knowledge of the Articles. This rule cannot be invoked in favor of a person who did not consult the memorandum and articles and thus did not rely them. In Rama Corporation Vs. Proved Tin and General Investment CG. the plaintiff contracted with a director of the defendant company and gave him a cherub under the company's articles,but in fact was not so authorized. The plaintiff has not seen the articles.