### State Alcohol Policy Condition Mandating Group Participation For License Renewal 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 new policy introduced a "cluster" system (grouping 1–5 shops) and made the renewal of individual licenses conditional upon two factors: (i) at least 70% of eligible licensees in a district applying for renewal, and (ii) all shops within a specific cluster opting for renewal.

The petitioners’ renewal applications were rejected because certain shops within their assigned clusters remained unrenewed, leading the Department to slate the entire clusters for e-auction.

Petitioners argued these clauses were arbitrary, created "economic coercion," and made their individual rights contingent on the actions of third parties.

1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise and Temperance Policy 2025–2029 are Mid-termly arbitrary or discriminatory, violating Article 14 of the Constitution.

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

The Court relied on the doctrine that liquor trade is res extra commercium, meaning there is no fundamental right to trade in intoxicants under Article 19(1)(g).

It applied the principle from Khoday Distilleries Ltd. v. State of Karnataka (1995), establishing that the State holds "exclusive privilege" over liquor and can create monopolies or impose restrictive conditions for its regulation.

Statutory reliance was placed on Section 37 of the Rajasthan Excise Act, 1950, which clarifies that no person has a claim to the renewal of a license.

Furthermore, the Court applied the principle of "Policy Wisdom," which dictates that unless a policy is "manifestly arbitrary," the judiciary should not substitute its own views for executive decisions regarding revenue optimization and administrative convenience.

The Court reasoned that while State action in the liquor trade is subject to Article 14 scrutiny, such review is limited because the trade is a privilege, not a right.

The Court found that the 70% district threshold and the cluster-based renewal requirements were rational mechanisms intended to prevent "fallow areas" and ensure revenue stability.

By linking individual renewals to cluster participation, the State sought to prevent licensees from "cherry-picking" only profitable shops while leaving non-viable ones to cause revenue loss or illegal trade.

The Court emphasized that the petitioners had no "vested right" to renewal under Section 37 of the Act.

The Court noted that since the petitioners applied for renewal under the new policy, they were estopped from challenging the very conditions they had previously accepted by signing the undertaking.

There was no evidence of "hostile discrimination" as the policy applied uniformly across all districts.

It held that the State has plenary power to regulate liquor under Entry 8 and 51 of List II and that renewal is a conditional benefit, not a right.

The Court dismissed the entire batch of writ petitions, refusing to interfere with the executive's policy wisdom or the e-auction process for the contested clusters.