State may link liquor license renewal to district-wide thresholds and cluster-based settlement without violating Article 14.

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 *Excise and Temperance Policy 2025–2029*.

Under the new policy, the State introduced a "cluster" system (grouping 1–5 shops) and made the renewal of individual licenses conditional 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.

The lead petitioner’s renewal application was cancelled because one shop in her assigned cluster remained unrenewed, leading the Department to put the entire cluster up for e-auction.

The petitioners alleged these clauses were arbitrary, created economic coercion, and made an individual’s right dependent on the conduct of third parties.

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

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

3. Whether the State's policy decision to implement a cluster-based settlement for revenue optimization is subject to intensive judicial review.

The Court applied the doctrine of *res extra commercium*, establishing that there is no fundamental right to trade in liquor under Article 19(1)(g).

It relied on *Khoday Distilleries Ltd. v. State of Karnataka (1995)*, which clarifies that the State holds "exclusive privilege" over intoxicating liquors and can create a monopoly or impose restrictive conditions on the trade.

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

Finally, it followed the principle that while State action in privilege-based trades must not be "manifestly arbitrary" under Article 14, the Court must respect executive wisdom in fiscal and policy matters.

The Court reasoned that since liquor trade is a privilege and not a right, the State possesses wide latitude to frame policies for revenue stabilization and the prevention of unregulated "fallow" areas.

It found that the 70% district-wide threshold and the cluster-continuity requirement were rational tools to ensure total settlement of shops and prevent licensees from "cherry-picking" high-potential shops while leaving non-viable ones to the State.

The Court rejected the argument of "economic coercion," noting that renewal is a voluntary choice subject to declared policy conditions which the petitioners had explicitly accepted in their application undertakings.

It held that a uniform benchmark applied across all districts does not constitute hostile discrimination, even if individual outcomes vary based on participation levels.

The Court emphasized that it cannot substitute its own economic judgment for that of the executive unless the policy is patently capricious.

The Court held that petitioners have no fundamental or vested right to renewal under Section 37 of the Rajasthan Excise Act.

Consequently, the High Court dismissed the entire batch of writ petitions, upholding the State’s right to cancel renewal applications and proceed with cluster-wise e-auctions where policy conditions were not met.