### Excise Policy Linking License Renewal to Cluster-Wide Participation and District Thresholds is Constitutionally Valid

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 (grouping 1–5 shops) and mandated that renewal of individual licenses in a district was conditional upon at least 70% of eligible licensees in that district opting for renewal.

If the 70% threshold was not met, or if all shops within a cluster did not apply for renewal, the shops were subject to e-auction.

The petitioners, despite fulfilling individual eligibility and paying fees, had their renewal applications cancelled because their clusters or districts failed to meet these collective policy benchmarks.

The Court applied the principle that while there is no fundamental right to trade in liquor under Article 19(1)(g) as it is res extra commercium, State actions remain subject to the touchstone of Article 14 regarding arbitrariness and discrimination.

It relied on Khoday Distilleries Ltd. v. State of Karnataka [(1995) 1 SCC 574] to establish that the State holds "exclusive privilege" over intoxicating liquors.

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

The Court reasoned that the formulation of excise policy is a matter of executive wisdom aimed at revenue optimization and preventing unregulated "fallow" areas.

It held that the 70% district-wide threshold and the cluster mechanism are rational policy tools intended to ensure administrative stability and prevent licensees from "cherry-picking" only high-potential shops while leaving others unsettled.

The Court rejected the argument of "economic coercion," stating that renewal is a voluntary privilege, not a right.

Furthermore, since the petitioners had applied for renewal under the new policy, the Court held they were estopped from challenging its terms after their applications were unsuccessfully processed according to the declared criteria they had initially accepted.

It answered that there is no fundamental or vested right to the renewal of a liquor license.

The Court concluded that the cluster-based settlement and the 70% renewal threshold are valid exercises of the State’s regulatory privilege and do not suffer from any constitutional infirmity.

All interim reliefs were vacated, and the State was permitted to proceed with the auction process as per the Policy.