Navigating Corporate Contracts: The Turquand Rule In Contemporary Context

Rhythm Chaurasia, LL.B., Career College of Bhopal, Bharkatulla University Bhopal (M.P.)

ABSTRACT

The rule of Turquand, alternatively known as the “The Doctrine of Indoor Management”, has been in existence from decades and hold a prominent place in corporate law, safeguarding and protecting the interests of third parties, transacting or dealing, with the companies by absolving them with the responsibilities of being privy to the company’s internal irregularities, thus, creates a presumption on the part of third party, that all the internal procedures are dealt without any irregularity provided that the privy shall not be ignorant of company’s Articles of Association and Memorandum of Association and the conducted should be bona fide. Whereas, there shall lie no suspicion or knowledge of irregularity or forgery.

The purpose served by the present article is to provide a comprehensive interpretation of the Turquand Rule, its historical origins, contemporary applications, and judicial perspectives opined by judges, by delving into its intricacies, therefore, the present article seek the purpose of shedding light not only on the doctrine itself, but on the manner in which this doctrine safeguards the integrity of corporate transactions subsequently offering legal protection to third parties.