State may condition liquor license renewal on cluster-wide participation and district-level renewal thresholds.

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 shops (1 to 5) are grouped together.

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

If these conditions were not met, the shops were subject to e-auction.

The petitioners, despite being eligible and having applied for renewal, had their applications cancelled because either the district threshold was not met or other shops in their cluster remained unrenewed.

The Court applied the principle that trade in liquor is res extra commercium, meaning no citizen has a fundamental right under Article 19(1)(g) to do business in intoxicants.

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

State action must still satisfy the test of non-arbitrariness under Article 14.

Statutory weight was given to Section 37 of the Rajasthan Excise Act, 1950, which explicitly states that no person has a claim to the renewal of a license.

The Court reasoned that since there is no fundamental right to trade in liquor, the State possesses wide discretion to frame policies for revenue optimization and administrative efficiency.

The "cluster" and "70% threshold" mechanisms were viewed as rational tools to ensure full settlement of shops and prevent "fallow areas" that could lead to illegal liquor trade.

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

The petitioners had signed undertakings accepting these policy terms when applying, thus estopping them from challenging the policy after failing to secure renewal.

The grouping of shops was deemed an administrative exercise within executive wisdom, which cannot be substituted by judicial opinion unless it is "manifestly arbitrary."

The impugned clauses are not arbitrary as they apply uniformly and serve a legitimate State interest in revenue stability.

There is no fundamental or vested right to renew a liquor license.

Policy decisions involving fiscal and regulatory strategy in the excise domain fall within the executive's wisdom and are not subject to judicial interference unless there is a clear constitutional violation, which was not found here.

All interim reliefs were vacated.