Introduction to Company Law

As per Clause (52) of Section 2 of the Companies Act, 2013 “Listed Company” means a company which has any of its securities listed on any recognised stock exchange;

Provided that such class of companies, which have listed or intend to list such class of securities, as may be prescribed in consultation with the Securities and Exchange Board, shall not be considered as listed companies.

Companies not to be considered as listed companies [Rule 2A of the Companies (Specification of definitions details) Rules, 2014].

The following classes of companies shall not be considered as listed companies, namely: -

a)Public companies which have not listed their equity shares on a recognized stock exchange but have listed their –

(i)non-convertible debt securities issued on private placement basis in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008; or

(ii)non-convertible redeemable preference shares issued on private placement basis in terms of SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013; or

b)Private companies which have listed their non-convertible debt securities on private placement basis on a recognized stock exchange in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008.

c)Public companies which have not listed their equity shares on a recognized stock exchange but whose equity shares are listed on a stock exchange in a jurisdiction as specified in section 23(3) of the Companies Act, 2013.

Analysis and Conclusion: Since the company has not listed its equity shares and the proposed non-convertible redeemable preference shares are to be listed only on a private placement basis, Rule 2A expressly provides that such public companies shall not be regarded as listed companies merely by listing Non-Convertible Redeemable Preference Shares. Therefore, listing these preference shares will not confer listed-company status on the company. Hence, the Company Secretary’s suggestion is not justified.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2026, Q. 1(c) (Syllabus 2022).

Doctrine of Ultra vires:

Any activity done contrary to or in excess of the scope of activity of the Companies Act, Memorandum of Association or Articles of Association will be ultra vires. Ultra vires activities can be divided into the following three divisions:

Ultra Vires the Companies Act:

Any act done contrary to or in excess of the scope of activity of the Companies Act will be ultra vires the Companies Act. Such an act is void and cannot be ratified even by unanimous resolution of all the shareholders. Further, a provision contained in the memorandum, articles, agreement, or resolution shall be void if it’s repugnant to any of the provisions in the Act.

Ultra Vires the Memorandum of Association:

In the case of a company whatever is not stated in the memorandum as the objects or powers is prohibited by the doctrine of ultra vires. As a result, an act which is ultra vires is void, and does not bind the company. Neither the company nor the contracting party can sue on it. Such an act is void and cannot be ratified even by unanimous resolution of all the shareholders.

Ultra Vires the Articles of Association:

If the acts of a company are ultra vires the Articles of Association but intra vires the memorandum of association (i.e., outside the scope of articles but within the powers conferred by the memorandum), it will be ultra vires the Articles of Association. These acts are also void, but the company in general meeting may alter the Articles by a special resolution and ratify the unauthorized acts.

Validity of contention of the bank:

In Re. South Durham Brewery Company [(1875) LR 7 HL 65c], the MOA of the company was unclear as to the classes of shares to be issued by it, but the AOA of the company gave power to issue shares of different classes as described therein. The Hon’ble Court held that Articles can be used to explain the ambiguity contained in the memorandum. “... their Lordships agree that in such cases the two documents must be read together at all events so far as may be necessary to explain any ambiguity appearing in the terms of the memorandum, or to supplement it upon any matter as to which it is silent.”

Hence, the act of offering the preference shares is not ultra vires the Companies Act, the MOA or AOA of the company and the contention of the bank to refuse it is not valid in light of the explanation and case law cited above.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2023, Q. 1(a) (Syllabus 2022).

It is not correct to state that the Companies Act, 2013 does not provide statutory recognition to the doctrine of lifting of corporate veil and only judicial interpretation disregard the concept of separate personality.

The Companies Act, 2013 itself contains some provisions in Sections 7(7), 251(1) and 339 which lift the corporate veil to reach the real forces of action. Section 7(7) of Companies Act, 2013 deals with punishment for incorporation of company by furnishing false information; Section 251(1) of Companies Act, 2013 deals with liability for making fraudulent application for removal of name of company from the register of companies and Section 339 of Companies Act, 2013 deals with liability for fraudulent conduct of business during the course of winding up.

Ever since the decision in Salomon v. Salomon & Co. Ltd., normally Courts are reluctant or at least very cautious to lift the veil of corporate personality to see the real persons behind it. Nevertheless, Courts have found it necessary to disregard the separate personality of a company in the following situations:

(1)Where the corporate veil has been used for commission of fraud or improper conduct. In such a situation, Courts have lifted the veil and looked at the realities of the situation.(Case Law :Jones vs. Lipman)

(2)Where a corporate facade is really only an agency instrumentality.(Case Law: R.G. Films Ltd)

(3)Where the conduct conflicts with public policy, courts lifted the corporate veil for protecting the public policy. (Case Law: Connors Bros. v. Connors)

(4)A company will be regarded as having enemy character, if the persons having de facto control of its affairs are resident in an enemy country or, wherever they may be, are acting under instructions from or on behalf of the enemy. (Case Law: Daimler Co. Ltd. v. Continental Tyre & Rubber Co.)

(5)Where it was found that the sole purpose for which the company was formed was to evade taxes the Court will ignore the concept of separate entity and make the individuals concerned liable to pay the taxes which they would have paid but for the formation of the company.(Case Law : Sir Dinshaw Maneckjee Petit, Vodafone case)

(6)Avoidance of welfare legislation is as common as avoidance of taxation and the approach in considering problems arising out of such avoidance has necessarily to be the same and, therefore, where it was found that the sole purpose for the formation of the new company was to use it as a device to reduce the amount to be paid by way of bonus to workmen, the Supreme Court upheld the piercing of the veil to look at the real transaction.(Case Law: The Workmen Employed in Associated Rubber Industries Limited, Bhavnagar v. The Associated Rubber Industries Ltd., Bhavnagar and another)

(7)Another instance of corporate veil arrived at by the Court arose in Kapila Hingorani v. State of Bihar.

(8)Where it is found that a company has abused its corporate personality for an unjust and inequitable purpose, the court would not hesitate to lift the corporate veil. Further, the corporate veil could be lifted when acts of a corporation are allegedly opposed to justice, convenience and interests of revenue or workmen or are against public interest.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 1(a) (Syllabus 2017).

A document can be served on company or its officer thereof by sending it to the company or the officer at its registered office by registered post or by speed post or by courier service or by delivering at his office or address, or by such electronic or other mode as may be prescribed - section 20 of the Companies Act, 2013. Here, "courier" means a document sent through a courier which provides proof of delivery - Rule 35 of the Companies (Incorporation) Rules, 2014.

Further, communication to company and officer can be made by electronic transmission. Electronic transmission means communication delivered by fax, email or by other means of electronic communication.

Considering the above provisions, service of document by Ram by way of courier service to company is valid service of document within the meaning of the Companies Act, 2013. Contention of the company is not valid. Articles of association cannot supersede provisions of the Companies Act, 2013.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2022, Q. 2(c) (Syllabus 2017).

CIN

It stands for Corporate Identification Number. It is issued by the Registrar of Companies (ROC) on incorporation of the company. It is issued to a company and serve as its identity. Once issued it cannot be cancelled. It is 21 digit alpha numeric code issued to every company incorporated in India.

DIN

DIN is a unique Identification Number allotted to an individual who is appointed as a director of a company, upon making an application in form DIR-3 pursuant to section 153 & 154 of the Companies Act, 2013.

Application for allotment of DINs to the proposed first Directors in respect of new companies shall be made in SPICe form only.

DIR-3 Form : Any person intending to become a director in an existing company shall have to make an application in eForm DIR-3 for allotment of DIN. Further, no person can get DIN without board resolution proposing his appointment as director.

DIR-6 Form : Any changes in the particulars of the directors shall be filed in form DIR- 6.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 2(b) (Old syllabus).

Sohan will be explained that-

•The legal authority for the establishment of the Centre for Processing Accelerated Corporate Exit (C-PACE) is Central Government. Section 396 of the Companies Act, 2013. Empowers the Central Government to establish offices for the registration of companies.

•Location: C-PACE is located at the Indian Institute of Corporate Affairs (IICA), Manesar, Gurugram (Haryana).

•Commencement: The establishment of C-PACE was notified via MCA Notification No. S.O. 1269(E) dated 17th March 2023. However, it became operational with effect from 1st April 2023.

Expected benefits:

The establishment of C-PACE is a key reform under the “Ease of Doing Business” initiative. Its main objective is to streamline and expedite the process of voluntarily striking off a company’s name from the register. The expected benefits include:

•Accelerated Process: The centralized processing significantly reduces the time taken for a company’s voluntary strike-off. Previously, this process could take over two years, but with C-PACE, the average time has been reduced to less than two months.

•Uniformity and Consistency: By centralizing the process, C-PACE ensures a uniform and consistent approach across the country, removing the variations that existed when applications were processed by various jurisdictional Registrars of Companies (ROCs).

•Hassle-Free Filing: The new process provides a simplified and hassle-free experience for stakeholders, with all communications (queries, approvals, or rejections) conducted through the central MCA portal, providing real-time updates.

•Reduced Burden on the Registry: C-PACE helps to reduce the workload on the ROCs, allowing them to focus on other core functions like inquiries, inspections, and investigations.

•Cleaner Registry: By speeding up the removal of defunct companies from the official register, C-PACE helps in keeping the corporate registry clean and updated, which provides more reliable and meaningful data to the public and stakeholders.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 3(c) (Syllabus 2022).

I.Pre-certification of E-Forms are done by practicing professionals like Practising Chartered Accountant (PCA), Practising Cost Accountant (PCA (Cost)) and Practising Company Secretary (PCS).

Pre-certification by an independent professional in the form is aimed at reducing the workload of Registrar of Companies (ROC). Thus, pre-certification of e-forms aids in straight through processing of e-forms without manual intervention by the officials at ROC.

II.Straight through process is an automated process in which a pre-certified e-form is taken on record by the MCA-21 system without human intervention.

III.If a professional gives a false certificate or omits any material information knowingly, he is liable to punishment under Section 447 and 448 of the Companies Act, 2013 besides disciplinary action by the Institute which issued the Certificate of Practice

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2025, Q. 2(d) (Syllabus 2022).

The e-forms are required to be authenticated by the authorized signatories using Digital Signature Certificate (DSC) as defined under the Information Technology Act, 2000. A digital signature is the electronic signature duly issued by a certifying authority that shows the authority of the person signing the same. It is an electronic equivalent of a written signature. Every user who is required to sign an e-form for submission with MCA is required to obtain a Digital Signature Certificate. For MCA-21, the following four types of users are identified as users of Digital Signatures and are required to obtain digital signature certificate:

1.MCA (Government) Employees.

2.Professionals (Company Secretaries, Chartered Accountants, Cost Accountants and Lawyers) who interact with MCA and companies in the context of Companies Act.

3.Authorized signatories of the Company including Managing Director, Directors, Manager or Secretary.

4.Representatives of Banks and Financial Institutions.

All companies (Public Company, Private Company, Company not having share capital, Company limited by share or guarantee, Unlimited Company) must comply with this requirement of registration of DSC by the director, manager and secretary. Foreign directors are required to obtain Digital Signature Certificate from an Indian Certifying Authority (List of Certifying Authorities is available on the MCA portal).The process of registration of DSC is same as applicable to others.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 2A(iii) (Syllabus 2017).

Lifting of Corporate Veil: The separate personality of a company is a statutory privilege and it must be used for legitimate business purposes only. Where a fraudulent and dishonest use is made of the legal entity, the individuals concerned will not be allowed to take shelter behind the corporate personality. The Court will break through the corporate shell and apply the principle/doctrine of what is called as “lifting of or piercing the corporate veil”. The Court will look behind the corporate entity and act as though no entity separates from the members existed and make the members or the controlling persons liable for debts and obligations of the company.

Avoidance of welfare legislation

Avoidance of welfare legislation is as common as avoidance of taxation and the approach in considering problems arising out of such avoidance has necessarily to be the same and, therefore, where it was found that the sole purpose for the formation of the new company was to use it as a device to reduce the amount to be paid by way of bonus to workmen, the Supreme Court upheld the piercing of the veil to look at the real transaction. (The Workmen Employed in Associated Rubber Industries Limited, Bhavnagar v. The Associated Rubber Industries Ltd., Bhavnagar and another, A.I.R. 1986 SC 1)

The corporate veil, therefore, can be lifted where the acts of the company are in avoidance of welfare legislation.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 2(b) (Syllabus 2022).

Negligence – The ‘doctrine of indoor management’, in no way, rewards those who behave negligently. Thus, where an officer of a company does something which shall not ordinarily be within his powers, the person dealing with him must make proper enquiries and satisfy himself as to the officer’s authority. If he fails to make an enquiry, he is estopped from relying on the rule. In the case of Underwood v. Benkof Liverpool (1924) 1 KB 775, a person who was a sole director and principal shareholder of a company deposited into his own account cheques drawn in favour of the company. Held, that, the bank should have made inquiries as to the power of the director. The bank was put upon an enquiry and was accordingly not entitled to rely upon the ostensible authority of director.

Similarly, in the case of Anand Behari Lal v. Dinshaw & Co. (Bankers) Ltd. AIR 1942 Oudh 417, an accountant of a company transferred some property of a company in favour of Anand Behari. On an action brought by him for breach of contract, the Court held that the transfer to be void. It was observed that the power of transferring immovable property of the company could not be considered within the apparent authority of an accountant.

Forgery – The rule of indoor management does not extend to transactions involving forgery or to transactions which are otherwise void or illegal ab initio. In the case of forgery, it is not that there is absence of free consent but there is no consent at all. The person whose signatures have been forged is not even aware of the transaction, and the question of his consent being free or otherwise does not arise. Consequently, it is not that the title of the person is defective but there is no title at all. Therefore, howsoever clever the forgery might have been, the personates acquire no rights at all. Thus, where the secretary of a company forged signatures of two of the directors required under the articles on a share certificate and issued certificate without authority, the applicants were refused registration as members of the company. The certificate was held to be nullity and the holder of the certificate was not allowed to take advantage of the doctrine of indoor management [Rouben v. Great Fingal Consolidated (1906) AC 439].

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2025, Q. 4A(ii) (Syllabus 2022).

As per Rule 10 (3) of Companies (Registration Offices and Fees) Rules, 2014 Except as otherwise provided in the Act the Registrar shall allow fifteen days’ time to the person or company which has filed the application or e-form or document for furnishing further information or for rectification of the defects or incompleteness or for re-submission of such application or e-form or document.

In line with the above, the action of Assistant Registrar of Companies by giving fourteen days’ time for furnishing further information or rectification of defects is not acceptable.

The e-form in which additional information is to be furnished by the company is GNL- 4.

In the case, where further information called for has not been provided or has been furnished partially or defects or incompleteness is not rectified or rectified partially within the period allowed, the Registrar shall either reject or treat the application or e-form or document as invalid. Consequently, the document may be rectified by the person or company only by fresh filing along with payment of fee and additional fee as applicable at the time of fresh filing without prejudice to any other liability under the Act.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 2A(iv) (Syllabus 2017).

The issue in question relates to the lifting of the corporate veil under judicial interpretations. Normally Courts are reluctant or very cautious about the lifting of the veil of corporate personality to see the real persons behind it.

The facts of the case are that Madhuri, a famous singer, was a rich woman enjoying large dividends and interest income. She formed three private companies and agreed with each to hold a block of investment as an agent for it. The Income received was credited in the accounts of the company but the company handed back the amount to her as a loan in disguise. This way she divided her income in three parts in a bid to reduce her tax liability.

It was held the company was formed by the person purely and simply as a means of avoiding tax and the company was nothing more than the person/assessee herself. It did no business, but was created simply as a legal entity to ostensibly receive the dividends and interests and to hand them over to the assessee as pretended loans. The Court decided to disregard the corporate entity and ascertain the real persons behind as it was being used for tax evasion (Re. Sir Dinshaw Maneckjee Petit, A.I.R. 1927 Bombay 371).

Thus, on the basis of the above, it can be concluded that formation of Company to reduce tax liability is illegal in reference to fundamental concepts of company formation.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 2A(v) (Syllabus 2017).

While the doctrine of, “constructive notice” seeks to protect the company against the outsiders, the principal of “indoor management” operates to protect the outsiders against the company. This doctrine emphasizes on the concept that an outsider whose actions are in good faith and has entered into a transaction with a company can have a presumption that there are no irregularities internally and all the procedural requirements have been complied with by the company. The doctrine of indoor management, also known as the Turquand rule is about one fifty years old, which protects outsiders against the actions done by the company.

Section 176 of the Companies Act, 2013 provides for the validity of acts of Directors - No act done by a person as a director shall be deemed to be invalid, notwithstanding that it was subsequently noticed that his appointment was invalid by reason of any defect or disqualification or had terminated by virtue of any provision contained in this Act or in the Articles of the company; Provided that nothing in this section shall be deemed to give validity to any act done by the director after his appointment has been noticed by the company to be invalid or have been terminated.

The object of the section is to protect persons dealing with the company - outsiders as well as members by providing that the acts of a person acting as director will be treated as valid although it may afterwards be discovered that his appointment was invalid or that it had terminated under any provision of this Act or the Articles of the company [Ram Raghubir Lal v. United Refineries (Burma) Ltd., (1932) 2 Com Cases 359; AIR 1931 Rang 139.

Exceptions:

Forgery – The rule of indoor management does not extend to transactions involving forgery or to transactions which are otherwise void or illegal ab initio.

Negligence – The ‘doctrine of indoor management’, in no way, rewards those who behave negligently. Thus, where an officer of a company does something which shall not ordinarily be within his powers, the person dealing with him must make proper enquiries and satisfy himself as to the officer’s authority. If he fails to make an enquiry, he is estopped from relying on the Rule.

(5 marks)

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2024, Q. 4A(iii) (Syllabus 2022).

The refund of MCA-21 fees is available in cases of multiple, incorrect and excess payments. It has to be informed to Magnificent Ltd. that refund process is not applicable for the following services/eforms:

•Public inspection of documents;

•Request for certified copies;

•Payment for transfer deeds;

•Stamp duty fee;

•IEPF payment;

•STP Forms;

•Form DIR-3.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2023, Q. 2(d) (Syllabus 2017).

In order to claim refund of multiple payments or incorrect payment or excess payment of MCA-21 fees, while using MCA services, following procedure is required to be followed:

•The Person is required to file the 'Refund Form' available on MCA21 portal for claiming refund.

•The refund of MCA21 fees is available in the following cases:

(a)Multiple Payments -This includes cases where service seeker does multiple filings such as in e-Form No. SH-7 and makes payments more than once (multiple times) for the same service. However, refund shall not be allowed in respect of approved e-Forms.

(b)Incorrect Payments - This includes cases where the service seeker has made payment in respect of an e-Form or Stamp duty through an incorrect option under Pay miscellaneous fee facility.

(c)Excess Payments -This includes cases where any excess fee has been paid by the service seeker due to some incorrect data entered in the e-Form or incorrect data in MCA-21 system due to migration of data from legacy system.

•The refund form is to be filed within the stipulated time period. Also, there shall be deduction in the amount to be refunded based on time period within which refund e-form is filed.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2021, Q. 2A(iii) (Syllabus 2017).

Difference between Pre-Scrutiny and Check Form:

Pre-scrutiny is a functionality that is used for checking whether certain core aspects are properly filled in an e- Form and are not in conflict with the existing data of the company available on the MCA portal. The necessary attachments and digital signatures should be affixed to the e-form before submitting the e-Form for pre-scrutiny. Internet connection is required to carry out the pre-scrutiny functions.

By clicking “Check Form”, the user will be in a position to find out whether the mandatory fields in an e-Form are duly filled-in. For example, if the user enters alphabets in “Date of Appointment of Director” field, he/she will be asked to correct the entered information.

Thus, the Check form is a basic verification done at the e-form level only by internal features of the form which ensure that all the mandatory and required field are filled up and attachment are made to the e-from, while Pre-Scrutiny is a complete legal and technical scrutiny of an e-form done in comparison to the data of the company available with the MCA portal before accepting the form.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 2(c) (Old syllabus).

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.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 2(c) (Syllabus 2017).

Rule 10(2) of the Companies(the Registration offices and Fees) Rules, 2014 provides that, where the Registrar on examining any application or e-form or document finds it necessary to call for further information or finds such application or e form or document to be defective or incomplete in any respect, he shall give intimation of such information called for or defect or incompleteness, by e-mail on the last intimated e-mail address of the person or the company, which has filed such application or e-form or document, directing him or it to furnish such information or to rectify such defects or incompleteness or to re-submit such application or e-Form or document within the prescribed time.

Rule 10(4) of the Companies (the Registration offices and Fees) Rules, 2014 provides that, in case where such further information called for has not been provided or has been furnished partially or defects or incompleteness has not been rectified or has been rectified partially or has not been rectified as required within the stipulated period, the Registrar shall either reject or treat the application or e-form or document, as the case may be, as invalid in the electronic record, and shall inform the person or the company.

Accordingly, where any document is recorded as invalid by the Registrar, the document may be rectified by the person or company by only fresh filing along with payment of fee and additional fee, as applicable at the time of fresh filing, without prejudice to any other liability under the Companies Act, 2013.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 2(d) (Syllabus 2017).

Pre-Scrutiny - Pre-scrutiny is a functionality that is used checking whether certain core aspects are properly filled in the e-form. It can be done by the company itself and no professional is required. Pre scrutiny function is available for all forms and is to be done by all class of companies.

Pre-Certification - Apart from authentication of e-forms by authorized signatories using digital signatures, some e-forms are also required to be pre-certified by practicing professionals. Pre-certification means certification of correctness of any document by a professional before the same is filed with the Registrar of Companies. E-forms mentioned in Rule 8(12) of the Companies (Registration Offices and Fees) Rules, 2014 such as INC-22, AOC-4, MGT- 14, DIR-12 etc., are required to be pre-certified by Company Secretaries or Chartered Accountants or Cost Accountants who are in whole-time practice by all class of companies except One Person Company and Small Companies.

Thus, every company is required to do pre-scrutiny of e-forms but pre-certification of certain forms is not mandatory for every class of company.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2020, Q. 3(c) (Syllabus 2017).

Doctrine of Indoor Management : The doctrine operates to protect the outsiders against the company.

In Royal British Bank v. Turquand, (1856) 119 E.R. 886, persons dealing with a company having satisfied themselves that a transaction is not in its nature inconsistent with the memorandum and articles, are not bound to inquire the regularity of any internal proceedings.

OR

According to this doctrine, persons dealing with the company need not inquire whether internal proceedings relating to the contract are followed correctly, once they are satisfied that the transaction is in accordance with the memorandum and articles of association.

The doctrine helps in protecting external members from the company and states that the people are entitled to presume that internal proceedings are as per documents submitted with the Registrar of Companies.

Hence, if an act is authorized by the Memorandum or Articles of Association, then the outsider can assume that all detailed formalities are observed in doing the act. This is the Doctrine of Indoor Management or the Turquand Rule.

Doctrine of Alter Ego : It involves ignoring the status of shareholders, officers and directors of a company in reference to their liability in their respective capacity so that they may be held personally liable for their actions when they have acted fraudulently or unjustly.

In Lennards Carying Co. Ltd. v. Asiatic Petroleum Co. Ltd. [1915] AC 705, The House of Lords stated that the default of the managing director who is the "directing mind and will" of the company, would be attributed to him and he be held for the wrong doing of the company .

OR

This doctrine was explained in the case of International Aircraft Trading vs. Manufacturers Trust Co.

The term alter ego can be described as the part of someone’s personality that is usually not seen by the others. A Company is deemed to be one and same as the owner of the company and vis a vis the principle of alter ego can only be applied in one direction that is to make company liable for an act committed by a person or group of persons who control the affairs of the company as they represent the alter ego of the company.

Directors and other persons who have control over the management of the company can be held liable for the acts committed by or on behalf of the company under the Doctrine of Alter ego. Since the corporation does not have mind of its own; so, its active and directing will must be sought in the person who is really directing the mind and will of the corporation, the very ego and centre of the personality of the corporation.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, December 2019, Q. 2(b) (Old syllabus).

Pre-fill

Pre-fill function in an e-Form is used for filling requisit information automatically from the system database, the requisite data are stored in the system to avoid repeatedly entering the same. For example, by entering the CIN of the company, the name and registered office address of the company automatically pre-filled by the system without any fresh entry.

Pre-scrutiny

Pre-scrutiny is a functionality that is used for checking whether certain core aspects are properly filled in the e-Form. The user has to login on MCA portal to perform the pre-scrutiny of E-form. The necessary attachments and digital signatures should be affixed before submitting the E-form for pre-scrutiny.

The difference between pre-fill and pre-scrutiny is that the pre-fill is done by internal features of the form which ensure that all the mandatory and required field are filled up, while Pre-Scrutiny is a complete technical scrutiny of an e-form relating to madatory field, attachment etc. done by the MCA portal before uploading the same on MCA Portal.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 2(d) (Old syllabus).

According to the doctrine of indoor management as laid down in Royal British Bank Vs. Turquand (1856) 119 E.R. 886 persons dealing with a company having satisfied themselves that the proposed transaction is not in its nature inconsistent with the memorandum and articles are not bound to inquire about the regularity of an internal proceedings. In other words, while persons contracting with a company are presumed to know the contents of the Memorandum and Articles, they are entitled to assume that the provisions of the articles have been observed by the officers of the company. It is no part of the duty of an outsider to see that the company carried out its own internal regulations. However, the doctrine of indoor management, in no way, rewards those who behave negligently. Thus where an officers of a company does something which shall not ordinarily be within his powers, the person dealing with him must make proper enquires and satisfy himself as to the officers authority.

In the instant case, the bank manager should have realised that the managing director has no right to collect the amount of a cheque drawn payable to the company. Before crediting the amount of the cheque into the personal account of the managing director he should have made inquiries as to the power of the managing director.

In the light of the above, the bank will be liable to the company for the amount of the cheque wrongly credited into the account of the managing director and the company will succeed.

Source⁠​‌​‌‌​‌​⁠: ICSI Guideline Answers, June 2019, Q. 3(a) (Old syllabus).