State excise policy clustering and renewal thresholds are valid exercises of executive privilege under Article 14.

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 State introduced a "cluster" system where shops (1 to 5) were grouped together for settlement.

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.

If these conditions were not met, the shops were subject to e-auction.

The petitioners’ renewal applications were rejected because specific shops within their clusters remained unrenewed or the district threshold was not met, leading to notices for cluster-wise auctions.

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 the actions of third parties.

2. Whether the State’s executive privilege in regulating liquor trade is absolute or subject to judicial review under Article 226.

3. Whether an existing licensee has a vested right to the renewal of a liquor license.

The Court applied the principle that there is no fundamental right to trade in intoxicants; it is a res extra commercium privilege regulated under Entry 8 and 51, List II of the Seventh Schedule.

It relied on Khoday Distilleries Ltd. v. State of Karnataka [(1995) 1 SCC 574], establishing that while the State has exclusive privilege, its methods must not be "manifestly arbitrary" under Article 14.

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

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

It held that the 70% district-wide threshold and the cluster-level requirements are rational mechanisms to ensure stability in settlement and are not arbitrary simply because they link an individual’s renewal to collective participation.

The Court found no evidence of "hostile discrimination," noting the policy applies uniformly across the State.

Furthermore, the Court noted that petitioners had accepted these terms by submitting renewal applications, creating an estoppel against challenging the policy once the outcome was unfavorable.

The "cluster" approach was deemed a valid administrative strategy to prevent vendors from "cherry-picking" profitable shops while leaving non-viable ones to the State, which would otherwise encourage illegal trade.

The Court declined to substitute its judgment for the State’s policy wisdom.

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