Excise policy requiring cluster-based license renewals and district-level thresholds is not manifestly arbitrary.

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 *Excise and Temperance Policy 2025–2029*

The 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 applying for renewal

If the 70% threshold was not met, or if shops within a cluster remained unrenewed after a limited bidding process, the shops were to be settled via e-auction

The petitioners, despite fulfilling individual eligibility and paying fees, had their renewal applications cancelled because their specific clusters or districts did not meet the collective policy criteria

The Court applied the doctrine of *res extra commercium*, establishing that there is no fundamental right to trade in liquor under Article 19(1)(g)

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

Furthermore, Section 37 of the *Rajasthan Excise Act, 1950* was applied, which explicitly states that no person has a vested claim to the renewal of a license

The Court also invoked the principle of "executive wisdom," holding that fiscal and economic policies are generally immune from interference unless they are manifestly arbitrary

The Court reasoned that since liquor trade is a regulated privilege and not a right, the State possesses wide latitude to determine settlement methods to optimize revenue and prevent illegal trade

It rejected the petitioners' argument of "economic coercion," noting that the 70% district-wide threshold and clustering are rational policy tools intended to ensure administrative stability and prevent "fallow" or unserved areas that often lead to bootlegging

The Court found no "hostile discrimination" because the conditions applied uniformly to all licensees across the state

Crucially, the Court observed that the petitioners had submitted their renewal applications with full knowledge of the policy terms, thereby attracting the principle of estoppel; they could not challenge the criteria simply because they failed to secure a renewal

The Court answered that there is no fundamental or vested right to license renewal

It concluded that the cluster mechanism and the 70% threshold are valid exercises of the State’s executive power aimed at revenue protection and regulatory efficiency

No relief was granted to the petitioners, and all interim stays or pending applications were disposed of