Arup entered into a transaction with Brilliant Merchandise Ltd. for a contract worth ₹ 51 lakh. The Articles of Association of the company stipulate that a contract above ₹ 25 lakh should be approved by a meeting of the

The doctrine of Constructive Notice protects a company from outsiders. The doctrine provides that an outsider must read the Memorandum and Articles of the Company and satisfy himself that the contract he is seeking to enter into with the company is within its powers. As far as internal procedures are concerned, an outsider is entitled to presume that everything has been according to the procedures laid down and there is no irregularity. An outsider cannot find out what is going on inside the doors as the doors of management are closed. This is known as the doctrine of Indoor Management [also known as rule in 'Royal British Bank v. Turquand' (1856) CI & B 327]. However, in certain exceptional situations the doctrine of indoor management is not applicable and one of them is when a person relies on a forged document. Nothing can validate forgery. A company cannot be held liable for forgery committed by its officers. This has been established in the case 'Ruben v. Great Fingall Consolidated' case [1906] 1 AC 439. In the instant case Arup has relied on a forged document. Therefore he will not be protected and he will not succeed in his pleading.