In Royal British Bank v. Turquand, (1856) 6 E&B 327, the rule of 'indoor management' was laid down to the effect that:

1. The Turquand Rule (doctrine of indoor management) protects bona fide outsiders dealing with the company: they may presume that all matters of INTERNAL MANAGEMENT (e.g. a resolution passed by Board, quorum present, proper notice given) have been REGULARLY done. 2. The rule is an outsider's protection against internal procedural defects. 3. Exceptions: (i) knowledge of irregularity by the outsider; (ii) negligence (suspicion that should have prompted inquiry); (iii) forgery — Ruben v. Great Fingall Consolidated, [1906] AC 439 — forged document is null and Turquand cannot validate; (iv) acts outside the apparent authority of the agent. 4. The doctrine is balanced by the doctrine of CONSTRUCTIVE NOTICE. 5. Hence option B is correct. _Source: Companies Act 2013 (Act 18 of 2013), Govt. of India MCA — Royal British Bank v. Turquand, (1856) 6 E&B 327_