### State may bundle liquor shops into clusters and mandate minimum district-wide renewal thresholds to optimize revenue.

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

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

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

The petitioners’ renewal applications were rejected because certain shops within their assigned clusters remained unrenewed, despite the petitioners meeting individual eligibility criteria.

They alleged these clauses were arbitrary and coercive, effectively forcing them to take over non-viable shops to save their own licenses.

The Court primarily applied the principle that while there is no fundamental right to trade in liquor under Article 19(1)(g) as it is res extra commercium, State actions must still satisfy the test of non-arbitrariness under Article 14.

It relied on Khoday Distilleries Ltd. v. State of Karnataka [(1995) 1 SCC 574], establishing that the State holds "exclusive privilege" over intoxicating liquors.

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

The principle of estoppel, where parties who participate in a process with knowledge of its conditions cannot later challenge those conditions.

The Court reasoned that the formulation of excise policy falls within the State's executive wisdom, aimed at revenue optimization and preventing illegal trade in unregulated ("fallow") areas.

It found that the 70% district threshold and the cluster mechanism were rational tools to ensure administrative stability and uniform settlement across the State.

The Court rejected the argument of "economic coercion," stating that renewal is a voluntary privilege, not a right; therefore, the State can impose conditions to ensure that non-profitable shops are not left unserved while only profitable ones are picked.

Regarding Article 14, the Court noted the policy applies uniformly to all licensees and does not create an "unintelligible differentia".

Finally, since the petitioners signed undertakings accepting the policy terms when applying for renewal, they were estopped from challenging the validity of those terms after failing to secure a license.

It answered the issues by affirming that while judicial review is permissible, the Court cannot substitute its wisdom for that of the executive in fiscal policy matters.

All writ petitions in the batch were dismissed, and the State's decision to cancel the petitioners' renewal applications and proceed with e-auctions for the clusters was upheld.