State excise policy making renewal contingent on cluster-wide participation and district thresholds is not manifest arbitrariness.

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: (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 or cancelled because either the district failed the 70% threshold or specific shops within their assigned clusters remained unrenewed, leading the Department to put the entire clusters up for e-auction.

1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise Policy 2025-2029 are manifestations of arbitrary and discriminatory State action violating Article 14 of the Constitution.

2. Whether an existing licensee has a vested or fundamental right to the renewal of a liquor license.

3. Whether the State’s exercise of "exclusive privilege" in liquor trade is subject to judicial review under Article 226.

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 non-arbitrariness under Article 14.

It relied on Section 37 of the Rajasthan Excise Act, 1950, which stipulates that no person has a claim to the renewal of a license.

The Court also invoked the "Doctrine of Estoppel," noting that petitioners who participate in a process with knowledge of its conditions cannot later challenge those conditions.

Furthermore, the State’s power to regulate intoxicants stems from Entries 8 and 51 of List II, Seventh Schedule, and the Directive Principle under Article 47.

The Court reasoned that the formulation of excise policy is an exercise of executive wisdom involving revenue optimization and administrative stability, which warrants judicial restraint.

It found that the 70% district-wide threshold and the cluster-based renewal system were rational mechanisms intended to prevent "fallow" (unserved) areas and revenue leakage.

The Court rejected the argument of "economic coercion," stating that renewal is a voluntary privilege, not a right; therefore, the State can validly link renewal to the collective settlement of a cluster to ensure geographical coverage and prevent illegal trade in unregulated gaps.

The Court also noted that the petitioners had signed undertakings accepting these policy terms when applying for renewal, thereby estopping them from challenging the policy after failing to meet its criteria.

It emphasized that no fundamental or vested right to beverage liquor trade exists.

The Court dismissed the batch of writ petitions, upholding the validity of Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise and Temperance Policy 2025–2029 and declining to interfere with the auction proceedings.