State liquor policy prescribing cluster-based renewal and district-wide participation thresholds does not violate Article 14.

In brief

The question

1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise & Temperance Policy 2025–2029 are constitutionally valid under Article 14 of the Constitution of India.

The court held

The Court held that the impugned clauses of the Excise Policy 2025–2029 are constitutionally valid and do not suffer from manifest arbitrariness.

It also directed

(1) no fundamental or vested right to license renewal exists.

(2) the State's policy choices regarding clusters and thresholds are within its executive domain.

(3) the petitioners, having participated in the process, cannot challenge its conditions after failing to secure renewal.

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

01Facts

The petitioners, existing retail liquor licensees in Rajasthan, challenged the "Rajasthan Excise & Temperance Policy 2025–2029".

¶ 3

The policy introduced a "cluster" system where shops (1 to 5) are grouped together.

¶ 3.1

Under Clauses 2.2.6, 2.2.7, and 2.2.8, renewal of an individual license was made contingent upon: (a) at least 70% of eligible licensees in a district applying for renewal, and (b) all shops within a specific cluster opting for renewal.

¶ 3.3

If these conditions were not met, the shops were to be settled via e-auction.

¶ 3.3

The petitioners, despite applying for renewal and paying fees, had their applications cancelled because other shops in their respective clusters remained unrenewed or the district threshold was not met.

¶ 3.5, 4.3.1

They alleged these clauses were arbitrary and coercive.

¶ 4.3

02Issues

i.1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise & Temperance Policy 2025–2029 are constitutionally valid under Article 14 of the Constitution of India.

¶ 3.6

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 conditioning of an individual’s renewal on the conduct of third parties (other cluster/district members) constitutes manifest arbitrariness.

¶ 4.3, 6.3.3

03Law Applied

The Court applied the principle that there is no fundamental right to trade in liquor under Article 19(1)(g), as liquor is res extra commercium.

¶ 6.3.1

It relied on Khoday Distilleries Ltd. v. State of Karnataka, establishing that the State holds "exclusive privilege" over intoxicating liquors and can create monopolies or impose restrictive conditions.

¶ 4.2.1, 6.3.2

The Court also invoked 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

Finally, the doctrine of limited judicial review in policy matters was applied, asserting that courts should not substitute executive wisdom with judicial opinion unless there is manifest arbitrariness.

¶ 6.3.4, 6.7.1

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

rajasthan excise act, 1950 Section 37

04Reasoning

The Court reasoned that since the liquor trade is a regulated privilege rather than a right, the State possesses wide latitude to frame policies for revenue optimization and administrative efficiency.

¶ 6.1-6.3

The "70% district threshold" and "cluster requirements" were viewed as rational policy mechanisms intended to ensure the stability of the entire excise network and prevent "fallow" or unregulated areas that could lead to illegal trade.

¶ 6.4.1, 6.5.2

The Court rejected the argument of arbitrariness, noting that the policy applied uniformly across the State.

¶ 6.4.1

It further observed that the petitioners had accepted these terms when submitting their renewal applications, thus bringing the principle of estoppel into play.

¶ 5.7, 6.6.3

The Court found that the clustering of non-viable shops with profitable ones was a legitimate exercise of the State's power to ensure full settlement of all shops to protect public revenue.

¶ 5.9, 6.5.2