### Excise Policy's District-Wise Renewal Thresholds and Cluster Mechanisms Do Not Violate Article 14.

In brief

The question

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 third-party conduct.

The court held

The Court answered all issues in the negative, holding that the impugned clauses are constitutionally valid and neither arbitrary nor discriminatory.

It also directed

It ruled that the petitioners have no fundamental or vested right to renewal under Section 37 of the Rajasthan Excise Act.

The Court held that the cluster system is a legitimate exercise of the State’s regulatory power and executive wisdom.

Consequently, the batch of writ petitions was dismissed, and all pending applications were disposed of.

01Facts

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.

¶ 3.6

The new policy introduced a "cluster" system where 1 to 5 contiguous shops were grouped together.

¶ 3.1

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

¶ 3.3

The petitioners’ renewal applications were cancelled or not considered because certain shops within their assigned clusters remained unrenewed, triggering a process to settle the entire cluster via e-auction.

¶ 3.5

02Issues

i.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 third-party conduct.

¶ 4.3

ii.2. Whether a licensee has a fundamental or vested right to the renewal of a liquor license under the Rajasthan Excise Act, 1950.

¶ 6.3.1

iii.3. Whether the State's "exclusive privilege" in liquor trade exempts its policy decisions from judicial review.

¶ 4.1

03Law Applied

The Court applied the principle that while there is no fundamental right to trade in liquor under Article 19(1)(g), State action must still satisfy the test of Article 14 regarding non-arbitrariness.

¶ 4.1, 6.3.3

The Court relied on Khoday Distilleries Ltd. v. State of Karnataka [(1995) 1 SCC 574], establishing that the State holds "exclusive privilege" over intoxicating liquors as they are res extra commercium.

¶ 6.3.2

It further applied Section 37 of the Rajasthan Excise Act, 1950, which clarifies that no person has a vested claim to the renewal of a license.

¶ 6.5.3

The principle of estoppel, noting that petitioners who participate in a process after accepting its terms cannot later challenge those conditions.

¶ 6.6.3

Provisions in the judgment · 1 · Linked ones open on LawLens

rajasthan excise act, 1950 Section 37

04Reasoning

The Court reasoned that the 70% district-wide threshold and the cluster mechanism are policy tools designed for revenue optimization, administrative efficiency, and the prevention of "fallow areas" where illegal trade might proliferate.

¶ 6.4, 6.5.2

It rejected the argument of "economic coercion," holding that because liquor trade is a privilege and not a right, the State can impose collective conditions for settlement to ensure total coverage of a district.

¶ 6.4.2

The Court found the classification rational, as it applied uniformly to all districts and licensees.

¶ 6.4.1

The Court noted that the petitioners had signed undertakings acknowledging these policy conditions during their application, thereby invoking the doctrine of estoppel.

¶ 5.7, 6.6.2

The Court emphasized that judicial review in excise matters is narrow and cannot be used to substitute judicial opinion for executive wisdom in fiscal or regulatory strategy.

¶ 6.3.5