State may link liquor license renewal to district-level thresholds and cluster-based settlement under its exclusive privilege.

The petitioners, existing licensees of retail liquor shops in Rajasthan, challenged the constitutional validity of Clauses 2.2.6, 2.2.7, and 2.2.8 of the *Excise and Temperance Policy 2025–2029*.

Under this new policy, the State introduced a "cluster" system (grouping 1–5 shops) and made the renewal of individual licenses conditional upon: (a) a district-wide renewal rate of at least 70%, 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, created "economic coercion" by forcing them to take over non-viable shops to save their own licenses, and violated Article 14.

1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise & Temperance Policy 2025–2029 are factorially arbitrary or discriminatory under Article 14 of the Constitution.

2. Whether an existing liquor licensee has a vested or fundamental right to the renewal of a license under the Rajasthan Excise Act, 1950.

The Court applied the doctrine that trade in liquor is *res extra commercium*, meaning there is no fundamental right under Article 19(1)(g) to trade in intoxicants; it is a "privilege" exclusively owned by the State.

It relied on *Khoday Distilleries Ltd. v. State of Karnataka* [(1995) 1 SCC 574], which established that while the State has a monopoly, its methods of granting licenses must not be "manifestly arbitrary" under Article 14.

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

The Court reasoned that since liquor trade is a regulated privilege rather than a right, the State possesses wide "executive wisdom" to frame policies ensuring revenue optimization and administrative stability.

The 70% district-wide threshold and the cluster-based renewal system were deemed rational mechanisms to prevent "fallow areas" (unserved locations) and avoid the "selective renewal" of only high-profit shops at the cost of State revenue.

The Court rejected the "economic coercion" argument, noting that renewal is voluntary and that the petitioners had signed undertakings accepting the policy's terms when applying.

It further held that linking an individual's renewal to the conduct of the cluster/district is a valid regulatory strategy to ensure comprehensive settlement of all shops.

The Court held: (1) there is no fundamental or vested right to the renewal of a liquor license.

(2) the cluster and percentage-based thresholds are valid exercises of policy power.

and (3) petitioners who participated in the process with knowledge of its terms are estopped from challenging them upon failing to secure a renewal.

All interim reliefs were vacated.