A village council in southern India has given the Indian division of Coca Cola two weeks to set out the reasons why its bottling plant in the village should not be closed down.
By Charles Havilland
BBC correspondent in southern India
Villagers, campaigners and a BBC radio programme have alleged that the plant in the state of Kerala is drying up local ground water and emitting toxic sludge.
Coca Cola has been facing a backlash in India recently
For its part, the soft drinks giant strenuously denies the allegations.
The case is pitting the village council of Perumatti against perhaps the world's biggest brand name.
Hindustan Coca Cola opened its bottling factory there four years ago.
Since then local people have been reported as saying the company has soaked up excessive water and that water has turned foul and impossible to drink, cook with or bathe in.
In July BBC Radio's Face the Facts programme said there were high levels of toxic metals in the sludge generated by the plant when bottles are cleaned.
Coca Cola insists all its plants are safe and any toxins are within legal limits.
With this notice the council is giving the company 15 days to say why its plants should not be shut down.
If Coca Cola fails to convince, it will face a closure notice. The Kerala High Court will then decide on the legal weight of that notice.
These are bleak times for Coca Cola in India. It and its rival Pepsi deny claims made last month by an environmental watchdog that there are high levels of pesticide in their Indian-made drinks.
Many people in India have cut down or given up on Cola consumption as a result.