State may link liquor license renewal to cluster participation and district-wide thresholds without violating 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 Benign or suffer from manifest arbitrariness and discrimination under Article 14 of the Constitution.

The court held

The Court dismissed the writ petitions, holding that the impugned clauses of the Excise Policy 2025–2029 are constitutionally valid.

It also directed

The Court answered the issues by stating that: (1) no fundamental or vested right to renewal exists in the liquor trade; (2) the cluster and threshold mechanisms are rational policy decisions aimed at revenue optimization; and (3) the petitioners were bound by the terms they accepted during the application process.

All pending applications were disposed of accordingly.

01Facts

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.

p. 26

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

p. 27

Under the impugned clauses, renewal of a 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.

p. 27

The petitioners’ renewal applications were rejected because certain shops within their assigned clusters remained unrenewed, leading to the clusters being put up for e-auction.

p. 28

The petitioners alleged these conditions were arbitrary, coercive, and violated Article 14 of the Constitution.

02Issues

i.1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise & Temperance Policy 2025-2029 are Benign or suffer from manifest arbitrariness and discrimination under Article 14 of the Constitution.

p. 26

ii.2. Whether an existing licensee has a vested or fundamental right to the renewal of a liquor license.

p. 34/41

iii.3. Whether the State’s "cluster" mechanism and the 70% district-wide renewal threshold are valid exercises of executive policy-making.

pp. 39-40

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, and the State holds exclusive privilege over its trade.

p. 38, relying on Khoday Distilleries Ltd. v. State of Karnataka (1995)

Under Section 37 of the Rajasthan Excise Act, 1950, no person has a claim for the renewal of a license as a matter of right.

p. 34/41

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

p. 39

The Court also applied the doctrine of estoppel, noting that candidates who participate in a process knowing the conditions cannot challenge them after an unfavorable outcome.

p. 42

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

rajasthan excise act, 1950 Section 37

04Reasoning

The Court reasoned that the 70% threshold and cluster system are regulatory tools designed to ensure revenue stability, administrative efficiency, and the prevention of unregulated "fallow" areas.

p. 36/40

It held that the linking of an individual's renewal to group participation (cluster/district) is a valid policy choice to prevent licensees from selectively picking only high-potential shops while leaving non-viable ones to the State.

p. 36/40

The Court found no "manifest arbitrariness" because the policy applies uniformly across the State.

p. 40

Furthermore, the petitioners had signed undertakings acknowledging these conditions when applying for renewal, thereby invoking the principle of estoppel.

pp. 41-42

The Court emphasized that it cannot substitute its own wisdom for that of the executive in fiscal or revenue matters unless there is a patent constitutional violation, which was absent here.

p. 39/42