State liquor policy linking license renewal to district-wide thresholds and cluster-participation is non-arbitrary and constitutionally valid.

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 New Policy introduced a "cluster" system where 7,665 shops were grouped into units of one to five contiguous shops.

Under the impugned clauses, renewal of an individual license was made contingent upon: (a) at least 70% of eligible licensees in the entire district applying for renewal, and (b) 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 fresh e-auction.

The petitioners argued these conditions were arbitrary, coercive, and violated Article 14.

1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise & Temperance Policy 2025–2029 are manifestly arbitrary or discriminatory under Article 14 of the Constitution.

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

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

It relied on the landmark precedent Khoday Distilleries Ltd. v. State of Karnataka [(1995) 1 SCC 574], establishing that the State holds "exclusive privilege" over liquor trade and can create a monopoly or impose restrictive conditions.

The Court further applied Section 37 of the Rajasthan Excise Act, 1950, which explicitly states no person has a claim for the renewal of a license.

Finally, the Court noted the "Policy Wisdom" doctrine, which restricts judicial review of executive fiscal policies unless they are patently arbitrary.

The Court reasoned that since the State possesses exclusive privilege over liquor, it has the latitude to determine the mode of settlement to maximize revenue and ensure administrative efficiency.

The clustering mechanism and the 70% district-wide threshold were viewed as rational policy tools to prevent "fallow areas" (where only profitable shops are taken and non-viable ones left), which could lead to illegal liquor trade.

The Court rejected the argument of arbitrariness, noting that the rules applied uniformly to all prospective and existing licensees across the State.

Critically, the Court observed that the petitioners had signed undertakings agreeing to the Policy's terms when applying for renewal; therefore, they were estopped from challenging the conditions after failing to secure the license.

The Court found no "manifest arbitrariness" as the 70% threshold was a collective stability measure within executive competence.

The Court answered that there is no fundamental or vested right to license renewal.

It concluded that the cluster system and renewal thresholds are matters of executive policy wisdom aimed at revenue stabilization and regulatory control, which do not warrant judicial interference under Article 226.

All pending applications were disposed of accordingly.