Between March and May 1954, an election and two riots took place in East Pakistan, with far-reaching implications. On 30 May, the prime minister of Pakistan, in a bellicose tone, declared that ‘enemy agents’ and ‘disruptive forces’ were at work and imposed governor's rule for the first time in East Pakistan. The autocratic and high-handed attitude of the Central government in Karachi over the seemingly wayward East Wing was to become a portent of future conflicts between the province and the state, eventually leading to the unmaking of Pakistan in 1971. What precipitated the 1954 crisis? Who were the enemy agents and disruptive forces that the prime minister had alluded to? The reference was to the Bengali labourers in East Pakistan—the main protagonists of the 1954 Karnaphuli Paper Mill and Adamjee Jute Mill riots. These were the most violent industrial riots in the history of United Pakistan, if not the subcontinent. Using sensitive materials obtained from multiple archives, this article dismantles the conventional thesis that these riots were ‘Bengali–Bihari riots’, fanned by the flames of Bengali provincialism at the political level, or events instigated by the Centre to derail the democratic hopes of the Bengali population of Pakistan. A microhistory of the events demonstrates a more complex picture of postcolonial labour formations and solidarities; the relationship between state-led industrialization and refugee rehabilitation, and conflicting visions of sovereignty. This is a story of estrangement between employers and workers over the question of who were the real sovereigns of labour, capital, and Pakistan itself.