The board took action as the factory was violating pollution control norms, officials said in Gurdaspur.
There have been complaints against A B Agro Limited, company run by Chadha, in the past by villagers and residents of the area that the management has not been following pollution norms and as a result foul smell was emanating and untreated water was going into the Beas river, they said.
Locals were suffering from lung diseases and ground water was also found to be polluted, they said.
"A team of senior PPCB officials, led by its chairman Ravinder Singh, had visited the liquor factory and found that its management was violating guidelines of the board and the factory was sealed," Gurdaspur Pollution Control Executive Engineer Sandeep Behl said.
Behl said that the management of the factory has been booked under relevant sections of the Water and Pollution Control Act. The accused were absconding.
Chadha and his younger brother Hardeep were killed in an exchange of fire at a farmhouse in South Delhi last month over a property dispute.