### Excise policy transition to cluster-based renewal subject to district-wide thresholds is constitutionally valid and non-arbitrary.

The petitioners, existing licensees of retail liquor shops 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 Policy introduced a "cluster" system (1–5 shops) and mandated that renewal of individual licenses in a district was conditional upon (i) 70% of eligible licensees in that district applying for renewal, and (ii) all shops within a specific cluster opting for renewal.

The petitioner’s renewal application was cancelled because one shop in her assigned cluster remained unrenewed, leading the Department to propose a cluster-wise auction.

The petitioners argued these conditions were arbitrary, coercive, and created an unreasonable classification.

1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise Temperance Policy 2025-2029 are factorially arbitrary and violative of Article 14 of the Constitution of India.

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

3. Whether the State's "exclusive privilege" in liquor trade exempts its policy decisions from judicial review on the grounds of fairness and non-arbitrariness.

The Court 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], establishing that the State holds "exclusive privilege" over intoxicants and can create monopolies or impose restrictions different from ordinary trades.

However, per State of Kerala v. Unni [AIR 2007 SC 819], State action must still satisfy the test of Article 14 (non-arbitrariness).

Section 37 of the Rajasthan Excise Act, 1950 was invoked, which explicitly states that no person has a claim to the renewal of a license.

The Court reasoned that since liquor trade is a regulated privilege rather than a right, the State possesses wide latitude in framing policies for revenue optimization and administrative efficiency.

It found that the 70% district-wide renewal threshold and the cluster mechanism were rational policy tools designed to prevent "fallow areas" and revenue leakage.

The Court rejected the plea of arbitrariness, noting the policy applied uniformly across the State.

It observed that the petitioners had accepted these conditions in their renewal applications, creating an estoppel against subsequent challenges.

The Court emphasized that judicial review cannot substitute executive wisdom with judicial opinion on economic or fiscal policy unless manifest illegality is shown; here, no such infirmity was found as the cluster system served the legitimate State objective of structured settlement.

The Court answered the issues by holding that there is no fundamental or vested right to the renewal of a liquor license.

The Court held that Clauses 2.2.6, 2.2.7, and 2.2.8 were constitutionally valid and not "manifestly arbitrary" as they were based on rational fiscal considerations.

The Court dismissed the batch of writ petitions, affirming the State's right to cancel renewal applications and proceed with cluster-wise auctions where policy conditions were not met.

All pending applications were disposed of accordingly.

The Court 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], establishing that the State holds "exclusive privilege" over intoxicants and can create monopolies or impose restrictions different from ordinary trades.

However, per State of Kerala v. Unni [AIR 2007 SC 819], State action must still satisfy the test of Article 14 (non-arbitrariness).

Section 37 of the Rajasthan Excise Act, 1950 was invoked, which explicitly states that no person has a claim to the renewal of a license.

The Court reasoned that since liquor trade is a regulated privilege rather than a right, the State possesses wide latitude in framing policies for revenue optimization and administrative efficiency.

It found that the 70% district-wide renewal threshold and the cluster mechanism were rational policy tools designed to prevent "fallow areas" and revenue leakage.

The Court rejected the plea of arbitrariness, noting the policy applied uniformly across the State.

It observed that the petitioners had accepted these conditions in their renewal applications, creating an estoppel against subsequent challenges.

The Court emphasized that judicial review cannot substitute executive wisdom with judicial opinion on economic or fiscal policy unless manifest illegality is shown; here, no such infirmity was found as the cluster system served the legitimate State objective of structured settlement.

The Court held that Clauses 2.2.6, 2.2.7, and 2.2.8 were constitutionally valid and not "manifestly arbitrary" as they were based on rational fiscal considerations.

The Court dismissed the batch of writ petitions, affirming the State's right to cancel renewal applications and proceed with cluster-wise auctions where policy conditions were not met.

All pending applications were disposed of accordingly.