Absence of fundamental right to liquor trade permits State-mandated cluster-based renewal and district-wide participation thresholds.

The petitioners, existing liquor licensees in Rajasthan, challenged the constitutional validity of Clauses 2.2.6, 2.2.7, and 2.2.8 of the Rajasthan Excise & Temperance Policy 2025–2029.

The new policy introduced a "cluster" system where shops (1 to 5) are grouped together.

Under the impugned clauses, the renewal of a license was made contingent upon: (i) at least 70% of eligible licensees in a district applying for renewal, and (ii) all shops within a specific cluster applying for renewal.

If these conditions were not met, the shops were subject to cluster-wise e-auction.

The petitioners, despite fulfilling individual eligibility and paying fees, had their renewals cancelled because other shops in their clusters or districts remained unrenewed.

1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise Policy 2025-2029 are arbitrary, discriminatory, and violative of Article 14 of the Constitution by making an individual’s renewal dependent on the conduct of third parties.

2. Whether the State’s power to regulate the "exclusive privilege" of liquor trade is subject to judicial review on the touchstone of reasonableness and non-arbitrariness.

3. Whether an existing licensee has a vested right to the renewal of a liquor license under the Rajasthan Excise Act, 1950.

The Court primarily applied the principle that there is no fundamental right to trade in liquor under Article 19(1)(g), as liquor is res extra commercium.

It relied on Khoday Distilleries Ltd. v. State of Karnataka [(1995) 1 SCC 574], which established that the State holds "exclusive privilege" over intoxicating liquors, though its actions must still satisfy the non-arbitrariness test of Article 14.

The Court further applied Section 37 of the Rajasthan Excise Act, 1950, which stipulates that no person has a claim to the renewal of a license.

The doctrine of estoppel, noting that petitioners who participate in a process after accepting policy terms cannot later challenge them.

The Court reasoned that the formulation of excise policy is a matter of executive wisdom aimed at revenue optimization and preventing illegal trade in "fallow" (unserved) areas.

It held that the 70% district-wide threshold and the cluster mechanism are rational tools to ensure administrative stability and collective responsibility in revenue collection.

The Court found no "manifest arbitrariness" because the rules applied uniformly across the State.

The Court noted that since Section 37 of the Excise Act explicitly denies any vested right to renewal, the petitioners could not claim a legal injury when the State exercised its privilege to auction clusters that were not fully renewed.

The Court declined to substitute its own economic views for the State's policy choice to club profitable and non-viable shops into clusters.

It ruled that the petitioners have no fundamental or vested right to renewal and were bound by the policy terms they initially accepted.

The High Court dismissed the entire batch of writ petitions, upholding the State's right to proceed with the cluster-wise e-auctions as per the 2025-2029 Policy.