State liquor policy prescribing district-wide renewal thresholds and cluster-based auctions is not held to be mid-term arbitrary.

The petitioners, existing liquor licensees, 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 (grouping 1–5 shops) and made the renewal of individual licenses conditional upon two factors: (a) at least 70% of eligible licensees in a district applying for renewal, and (b) all shops within a specific cluster applying for renewal.

The petitioner in the lead case applied for renewal, but because one shop in her assigned cluster remained unrenewed, her application was cancelled, and the cluster was slated for e-auction.

The petitioners argued these clauses were arbitrary, coercive, and violated Article 14 by making their right to renewal dependent on the actions of third parties.

The Court applied the principle that the State holds "exclusive privilege" over intoxicating liquors under Entry 8 and 51 of List II, Seventh Schedule, and Article 47 of the Constitution.

It relied on the landmark precedent *Khoday Distilleries Ltd. v. State of Karnataka [(1995) 1 SCC 574]*, which established that liquor is *res extra commercium* and no fundamental right to trade in it exists under Article 19(1)(g).

The Court further invoked Section 37 of the Rajasthan Excise Act, 1950, which provides that no person has a vested right or claim to the renewal of a license.

Finally, it applied the doctrine of "limited judicial review" in policy matters, asserting that executive wisdom in fiscal and regulatory affairs is not to be disturbed unless it is patently arbitrary or lacks a rational nexus to the objective.

The Court reasoned that since liquor trade is a privilege and not a right, the State enjoys wide discretion in settling licenses to optimize revenue and prevent illegal trade.

It found that the 70% district-wide threshold and the cluster-based renewal system were uniform policy mechanisms designed to ensure administrative stability and prevent "fallow areas" where unserviced shops might encourage bootlegging.

The Court rejected the argument of "economic coercion," stating that renewal is a voluntary commercial choice subject to the State's terms.

Crucially, the Court noted that the petitioners had submitted their renewal applications with full knowledge of these conditions and had signed undertakings to abide by the policy; therefore, they were estopped from challenging the criteria after failing to secure the benefit.

It held that linking an individual's renewal to the cluster's performance was a rational fiscal strategy to ensure that low-viability shops are not abandoned while high-potential shops are cherry-picked.

It upheld the validity of Clauses 2.2.6, 2.2.7, and 2.2.8, finding them neither arbitrary nor discriminatory.

The Court held that the policy fell within the executive's legitimate domain and satisfied the test of reasonableness under Article 14.

The batch of writ petitions was dismissed, and the State's action in cancelling the renewal applications and proceeding with e-auctions was upheld.