2. The Doctrine of Indoor Management says that
if a person enters into a contract with a
Company he has the rights to inquire into the
correctness of the contract since Article and
Memorandum of Association are public
documents.
It is invoked by the person
3. T.R Pratt (Bombay) Ltd. V. E.D. Sassoon & Co.
Ltd.,
Company A lent money to Company B on a
mortgage of its assets. The procedure laid down
in the articles for such transactions was not
complied with. The directors of the two
companies were the same. Held, the lender had
notice of the irregularity and hence the mortgage
was not binding
4. Memorandum of Association and Articles of
Association are two most important documents
needed for the incorporation of a company
Section 610 of the Companies Act, 1956
provides that the memorandum and articles
when registered with Registrar of Companies
'become public documents' and then they can
be inspected by anyone on payment of a
nominal fee.
5. Every person dealing with the company is deemed
to have a constructive notice of the contents of the
memorandum and articles of the company.
An outsider dealing with the company is
presumed to have read the contents of the
registered documents of the company.
The further presumption is that he has not only
read and inspected the documents but has also
understood them fully in the proper sense. This is
known as the rule of constructive notice.
So, the doctrine or rule of constructive notice is a
presumption operating in favour of the company
against the outsider