When you buy a factory, acquire a company, take land on lease or finance a project, you take on its environmental position, good or bad. Permissions may have lapsed or be in the wrong name. The unit may have expanded without consent or EC. The land may be forest, in a coastal zone, or in an eco-sensitive zone. There may be pending notices, environmental compensation demands or NGT proceedings. And since July 2025, the Environment Protection (Management of Contaminated Sites) Rules, 2025 provide a formal process for identifying contaminated land and making the polluter pay for remediation.
Environmental due diligence identifies these risks before you commit, so that you can walk away, renegotiate the price, require the seller to fix problems, or protect yourself through warranties, indemnities and escrow. This page explains what we review, how the review is structured for different transactions, the new contaminated sites rules, and the deal protections that follow from the findings.
हिंदी में सारांश
फैक्ट्री, ज़मीन या कंपनी खरीदने, लीज़ पर लेने या प्रोजेक्ट को लोन देने से पहले पर्यावरणीय ड्यू डिलिजेंस से पता चलता है कि अनुमतियाँ वैध हैं या नहीं, ज़मीन वन, CRZ या इको-सेंसिटिव ज़ोन में तो नहीं, कोई नोटिस या मुआवज़े की माँग लंबित तो नहीं, और ज़मीन दूषित तो नहीं। जुलाई 2025 के दूषित स्थल नियमों के तहत प्रदूषक को सफ़ाई का खर्च देना होता है। निष्कर्षों के आधार पर कीमत, शर्तें, वारंटी और इंडेम्निटी तय होती हैं।
Is this your situation?
- You are buying a running factory or industrial plot
- You are acquiring shares in a company with manufacturing units
- You are buying land for a project, resort or housing
- You are taking an industrial or warehouse property on lease
- You are a lender or investor financing a project
- You are selling and want to fix problems before the buyer's review
- You are buying a flat or villa near the coast, a forest or a park
What due diligence covers
Permissions
CTE, CTO, EC, groundwater, waste authorisations and EPR registrations, their validity and holder.
Land restrictions
Forest, CRZ, eco-sensitive zones, wetlands, Aravalli and other protected land.
Compliance history
Inspections, notices, compensation demands, closures and court or NGT cases.
Contamination
Signs of soil or groundwater contamination and exposure under the 2025 rules.
Transferability
Whether permissions can be transferred and what the buyer must do.
Deal protections
Conditions, warranties, indemnities, escrow and price adjustments.
Share deals and asset deals
The structure of the transaction changes the risk. In a share acquisition, the company continues to hold its permissions, and its liabilities stay with it, so the buyer inherits everything indirectly through the company. Permissions generally continue, though boards should be informed of changes in management or control where the consent requires it. In an asset purchase, the buyer acquires the plant and land but not the company, so permissions usually must be transferred or obtained afresh in the buyer's name, and some liabilities may stay with the seller, though environmental liabilities tied to the site can follow the land.
The due diligence should be designed around the structure. For a share deal, the focus is on the company's full compliance history and contingent liabilities. For an asset deal, the focus is on transferability of permissions, the time needed to obtain them in the buyer's name, and liabilities that can follow the site, including contamination.
Land: forest, coast, parks and wetlands
For land purchases, the most serious environmental risks are restrictions on use. Land recorded or treated as forest cannot be used for non-forest purposes without central approval, and the Supreme Court continues to apply the broad Godavarman meaning of forest while it examines the 2023 amendment. Coastal land may fall in a no-development zone under the CRZ Notification, 2019. Land near national parks and sanctuaries may be in an eco-sensitive zone with prohibited and regulated activities. Wetlands, water bodies and, in NCR, Aravalli land under special orders carry their own restrictions.
These restrictions are often not obvious from the title documents. Due diligence checks revenue and forest records, coastal zone management plans, ESZ notifications, master plans and court orders affecting the area. A finding at this stage can save the entire investment. See forest clearance, CRZ clearance and eco-sensitive zones.
Contaminated land and the 2025 rules
India now has a formal framework for contaminated sites. The Environment Protection (Management of Contaminated Sites) Rules, 2025, notified on 25 July 2025, require district administrations to report suspected contaminated sites every six months, and the state board or a designated reference organisation to carry out a preliminary assessment within 90 days and, where contamination is likely, a detailed survey within the next 90 days. Confirmed sites are publicly notified and access may be restricted. The board must identify the persons responsible, who bear the cost of remediation under the polluter pays principle. Where the polluter cannot be found or cannot pay, the central and state governments share the cost. Criminal liability may arise under the Bharatiya Nyaya Sanhita where contamination causes death or serious harm.
For buyers of industrial land, this makes contamination a real legal risk, not only a technical one. Due diligence should look for signs of past dumping, chemical storage, effluent discharge on land, and old waste pits, review the site's history, and where warranted, commission soil and groundwater testing. The agreement should address who bears the risk if the site is later notified as contaminated.
How we carry out due diligence
Agree the scope
Based on the transaction, the sites and the timeline.
Review documents
Permissions, returns, notices, correspondence and land records.
Search public sources
Board orders, NGT and court cases, PARIVESH records and notifications.
Visit the site
With a technical consultant where needed.
Report red flags
Findings ranked by risk, with the practical consequence of each.
Translate into deal terms
Conditions precedent, warranties, indemnities, escrow and price adjustments.
Protecting yourself in the agreement
Findings matter only if they shape the deal. Serious problems that make the asset unusable, such as land in a no-development zone or a factory that cannot get consent at its location, may justify walking away. Fixable problems can be made conditions precedent: the seller renews the CTO, transfers the groundwater permission, files missing returns or settles a compensation demand before completion. Uncertain risks, such as possible contamination or pending proceedings, can be covered by specific indemnities, escrow or retention of part of the price, and warranties on compliance.
For lenders, findings can be built into conditions of disbursement and covenants, such as obtaining EC before construction loans are released, maintaining consents, and reporting notices promptly. Investors may ask for an environmental action plan with milestones as part of the investment terms.
Time and typical cost
Our fees are agreed in writing at the start, stage by stage. They are not linked to the outcome.
| Stage | Usual time | What it involves |
|---|---|---|
| Scoping | 1 to 3 days | Our fee estimate |
| Document and public record review | 1 to 2 weeks | Our fee |
| Site visit | 1 to 2 days per site | Travel; consultant's fee if needed |
| Red flag report | 1 week after review | Written report |
| Deal terms | Alongside negotiations | Drafting support |
Common red flags and how deals deal with them
| Red flag | Usual deal response |
|---|---|
| CTO expired or in the wrong name | Condition precedent: renewal or transfer before completion |
| Expansion without consent or EC | Specific indemnity; price adjustment; walk away if serious |
| Groundwater used without permission | Condition precedent: permission obtained |
| Pending compensation demand | Escrow or specific indemnity |
| Land partly forest or in CRZ | Carve out the affected portion or walk away |
| Signs of contamination | Testing; specific indemnity; escrow |
Documents usually needed
Permissions
- All consents, EC, groundwater and waste authorisations
- EPR registrations and returns
History
- Notices, orders, compensation demands and replies
- Court and NGT case papers
Land
- Title, revenue and forest records
- Master plan and zoning
- Site history and any testing reports
Laws that apply
Consent and its transfer.
EC, waste, EPR and contaminated sites.
Identification, assessment, remediation and liability for contaminated sites.
Restrictions on land use.
How we work
We are a litigation and advisory practice led by Advocate BK Singh, with offices in Dwarka (New Delhi) and Vaishali (Ghaziabad). This is what you can expect:
- Scope fitted to the deal: share deal, asset deal, lease or loan.
- Red flags ranked: by practical consequence.
- Land restrictions checked: forest, coast, ESZ and wetlands.
- Findings turned into terms: conditions, indemnities and escrow.
- Written fee terms: agreed stage by stage, never linked to the outcome.
Mistakes we see in transactions
- Relying on the seller's statement that all permissions are in order
- Ignoring transfer requirements in an asset deal
- Not checking land against forest and coastal records
- Signing without an indemnity for pending notices
- Overlooking contamination on old industrial land
A factory purchase in Bawana
Here's a made-up example. A Delhi company agreed to buy a running plastic moulding unit in Bawana. Our review found that the CTO had expired eight months earlier, the unit was not registered for plastic EPR as a producer, and there was a pending DPCC notice on hazardous waste storage.
The agreement was revised so that the seller had to renew the CTO and settle the notice before completion, and a part of the price was retained until the buyer's EPR registration was in place.
Land near the Aravallis
Here's a second made-up example. An investor planned to buy farmland near the Aravalli hills in Haryana for a resort. The title was clean.
Our review of revenue records and court orders showed that part of the land was covered by orders under the Punjab Land Preservation Act and had forest characteristics. The investor bought only the unaffected portion, at a reduced price.
Frequently Asked Questions
What is environmental due diligence?
A legal review of environmental permissions, liabilities and risks before a transaction.
Is it needed for small deals?
It is worth doing for any industrial property or land with possible restrictions.
What is the difference between share and asset deals?
In share deals, the company's liabilities stay with it; in asset deals, permissions must usually be transferred.
Can consent be transferred to a buyer?
Usually yes, by application to the board.
What are the 2025 contaminated sites rules?
Rules notified on 25 July 2025 to identify, assess and remediate contaminated sites, with the polluter paying.
Does a buyer become liable for contamination?
It can, depending on the facts and the agreement; due diligence and indemnities matter.
Should I test the soil?
Where the site history suggests possible contamination, yes.
How long does due diligence take?
Usually two to four weeks for a single site.
Can sellers benefit from due diligence?
Yes, by fixing problems before the buyer finds them.
Do lenders need environmental review?
Often yes, for project finance and secured loans.
What deal protections are common?
Conditions precedent, warranties, indemnities, escrow and price adjustments.
Do you work with technical consultants?
Yes, for site visits and testing where needed.
Buying, Leasing or Lending?
Send us the transaction details. We will scope the review and give you a fee quote.
This page gives general information about environmental law as it stood when it was last reviewed. It is not legal advice on your case and does not promise any result. Environmental rules, EPR targets, GRAP measures and board procedures change often, so check the current position for your unit or project before acting.
Need help with Environmental Checks Before You Buy, Lease or Lend?
Send us the notice, the order or a few photos. We'll tell you where you stand, which authority or NGT bench deals with it and when the next step is due, in plain words.
