State holds exclusive privilege to link liquor license renewals to cluster-level participation and district-wide revenue thresholds.

In brief

The question

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.

The court held

The Court held that the impugned clauses are neither arbitrary nor discriminatory and fall within the State's regulatory privilege.

It also directed

It answered that there is no fundamental right to liquor trade or renewal of licenses.

The Court dismissed the batch of writ petitions, holding that it cannot substitute judicial opinion for executive policy wisdom.

All interim orders were vacated, and the State was permitted to proceed with the cluster auctions as per the Policy.

01Facts

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.

¶ 1.1, 3.6

The Policy introduced a "cluster" system (grouping 1–5 shops) and mandated that renewal of licenses in a district would only occur if 70% of eligible licensees applied.

¶ 3.1, 3.3

If a shop within a cluster remained unrenewed, the entire cluster was liable for e-auction unless other cluster members opted to take the unrenewed shop.

¶ 3.3

The petitioner’s renewal application for a shop in Barmer was cancelled because one shop in her cluster remained unrenewed, triggering a cluster auction.

¶ 3.5

02Issues

i.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.

¶ 2, 4.3

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

¶ 4.1, 5.2

iii.3. Whether the State’s exercise of "exclusive privilege" in liquor trade is immune from judicial review.

¶ 4.2, 6.3.3

03Law Applied

The Court applied the principle of "exclusive privilege" of the State under Entries 8 and 51 of List II, Seventh Schedule, and the Directive Principle under Article 47 of the Constitution.

¶ 6.1, 6.2

It relied on the landmark precedent *Khoday Distilleries Ltd. v. State of Karnataka (1995)*, establishing that liquor is *res extra commercium* and citizens have no fundamental right under Article 19(1)(g) to trade in it.

¶ 4.2.1, 6.3.2

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

¶ 5.2, 6.5.3

While State action remains subject to Article 14 (non-arbitrariness), judicial review of policy is limited to "manifest arbitrariness".

¶ 6.3.3, 6.3.4

Provisions in the judgment · 1 · Linked ones open on LawLens

rajasthan excise act, 1950 Section 37

04Reasoning

The Court reasoned that the cluster system and the 70% district-wide renewal threshold are matters of executive wisdom aimed at revenue optimization, administrative efficiency, and preventing "fallow" unregulated areas.

¶ 6.3.4, 6.4.1

It rejected the argument of arbitrariness, noting that the policy applies uniformly across the State and petitioners had accepted these terms by signing the renewal application.

¶ 6.4.1, 6.6.2

The Court found that linking individual renewal to cluster or district performance does not violate Article 14, as the State is entitled to adopt collective mechanisms for fiscal stability.

¶ 6.4.2

Furthermore, since there is no fundamental or statutory right to renewal under Section 37 of the Excise Act, the petitioners could not claim a vested right to continue their trade outside the new policy framework.

¶ 6.5.3, 6.7