Hyderabad: The Telangana High Court refused to stall a secret ballot election to determine the majority trade union at Sirpur Paper Mills in Kagaznagar in Komaram Bheem district, saying that workers have the right to vote and choose which trade union represents them, with such a process being the “bedrock of industrial democracy.”
Justice Nagesh Bheemapaka dismissed a writ petition filed by the paper mills company, which had argued that holding the election would disturb industrial peace and derail its fragile revival after years of insolvency.
The court said the company’s fears that the election would hurt day-to-day operations or jeopardise the resolution plan approved by the National Company Law Tribunal (NCLT) were “speculative and unsupported by any tangible material.”
On the contrary, the court observed, the very purpose of a secret ballot under the Code of Discipline is to promote orderly industrial relations and give workers a legitimate, democratic voice and not disrupt them.
The High Court also dismissed the company’s allegation that labour authorities had acted with bias or mala fide intentions, saying the charge was “bald and unsupported.” The authorities had acted squarely within their statutory mandate under the Trade Unions Act, the Industrial Disputes Act and the Code of Discipline, the judge said.
Background of case
Sirpur Paper Mills has had a troubled financial history. The unit was declared sick after its net worth eroded, forcing it to suspend operations in 2014. Insolvency proceedings were initiated under Section 9 of the Insolvency and Bankruptcy Code, culminating in an NCLT-approved resolution plan in July 2018, following which JK Paper Ltd took over management and resumed operations
Before the shutdown, the factory had as many as 15 trade unions. During the four-year closure, several of them went dormant and stopped filing annual returns as required under the Trade Unions Act, 1926.
After the revival, the company entered into a settlement with workers in January 2023 under Section 12(3) of the Industrial Disputes Act, governing service conditions and grievance redressal. The settlement is valid till March 2026.
Against this backdrop, the Deputy Commissioner of Labour, Adilabad, acting as Returning Officer, issued a communication on October 22, 2025, fixing a meeting for October 28 to conduct the secret ballot and asked trade unions to nominate their representatives.
The company rushed to the High Court, contending the move was both arbitrary and illegal.
What the company said
Sirpur Paper Mills raised three main objections. First, it argued that most trade unions had effectively ceased to exist, having failed to file annual returns for over a decade, and were therefore disqualified from participating in any election. Second, it said the existing Section 12(3) settlement already governed worker-management relations and remained in force till March 2026, making the election redundant.
Third, and perhaps most tellingly, it warned that at this “critical stage of revival,” a trade union election was a distraction the company could not afford, risking a slide back into financial distress.
The labour authorities pushed back on all counts. The election, they said, was meant to ensure industrial peace, not disturb it, and there was no clause in the existing settlement that barred such a process.
On the question of defunct unions, the state pointed out that non-filing of annual returns does not automatically cancel a trade union’s registration. Under Section 10 of the Trade Unions Act, cancellation requires due notice and a formal procedure and is not an automatic consequence.
High Court refuses to examine validity of unions
The court agreed with the state. On the disputed question of which unions remain validly registered, Justice Bheemapaka said these were factual matters to be examined by the competent statutory authorities under the Trade Unions Act and not by the High Court in a writ petition under Article 226 of the Constitution.
With that, the court declined to interfere and let the election process proceed.
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