State excise policy mandating cluster-based liquor shop renewals is not arbitrary and lacks fundamental right protection.

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 contiguous shops) and made the renewal of individual licenses conditional.

Specifically, renewal in a district was contingent upon 70% of eligible licensees applying for renewal; if this threshold was not met, or if all shops within a specific cluster did not apply, the shops were subject to e-auction/e-tender.

The petitioners had applied for renewal, but their applications were cancelled because their shops were part of clusters where other shops remained unrenewed or the district threshold was unmet.

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.

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

The Court applied the principle that trade in liquor is *res extra commercium*, meaning there is no fundamental right to carry on such business under Article 19(1)(g).

It relied on the landmark precedent *Khoday Distilleries Ltd. v. State of Karnataka* (1995), which established that the State holds "exclusive privilege" over intoxicating liquors and can create a monopoly or impose restrictive regulations.

It further invoked 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 noted the "Directive Principle" under Article 47 of the Constitution, which mandates the State to endeavor to bring about prohibition.

The Court reasoned that while State action in liquor trade is subject to Article 14 scrutiny for "manifest arbitrariness," the formulation of excise policy falls within executive wisdom involving revenue optimization and administrative convenience.

The 70% renewal threshold and cluster mechanism were deemed rational policy tools intended to prevent "fallow" unregulated areas and ensure stability in revenue collection across a district.

The Court rejected the argument of "economic coercion," noting that renewal is voluntary and the State is not obliged to allow selective renewal of only profitable shops while leaving non-viable ones unsettled.

Finally, the Court observed that the petitioners had accepted these policy terms when submitting their renewal applications and were thus estopped from challenging them after failing to secure a renewal.

It held that there is no fundamental or vested right to the renewal of a liquor license.

The impugned clauses of the Excise Policy 2025–2029 were upheld as they operate uniformly, lack manifest arbitrariness, and serve legitimate State interests in revenue and regulation.

The Court dismissed the batch of writ petitions, refusing to substitute its own judgment for executive policy wisdom.