State may link liquor license renewals to collective district-wide and cluster-based thresholds for revenue stability.

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

The State introduced a "cluster" system (groups of 1–5 contiguous shops) and set new renewal conditions.

Clause 2.2.6 made renewals in a district conditional upon a 70% renewal rate by eligible licensees, and Clause 2.2.8 mandated that if any shop in a cluster remained unrenewed, the entire cluster would be auctioned unless existing licensees took over the unrenewed shops.

The petitioners’ renewal applications were cancelled because their clusters or districts failed to meet these collective thresholds, leading the State to propose e-auctions for those shops.

The Court 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)*, establishing the State's exclusive privilege to regulate or prohibit liquor trade.

It further applied Section 37 of the Rajasthan Excise Act, 1950, which stipulates that no licensee has a vested right to the renewal of a license.

The Court reasoned that the formulation of excise policy is a matter of executive wisdom involving revenue optimization and administrative convenience.

It held that the 70% district threshold and the cluster mechanism are rational policy tools intended to prevent "fallow areas" (unregulated zones) and ensure revenue stability.

The Court rejected the argument of "economic coercion," noting that renewal is voluntary and the State is entitled to prevent licensees from "cherry-picking" profitable shops while leaving non-viable ones unsettled.

Furthermore, the Court observed that the petitioners had signed undertakings accepting the policy's terms when applying for renewal, thus estopping them from challenging those terms after failing to secure the benefit.

The Court found no "manifest arbitrariness" as the rules applied uniformly to all districts.

The Court ruled that it cannot substitute its own wisdom for that of the executive in fiscal and policy matters.

Consequently, the batch of writ petitions was dismissed, and the State’s decision to cancel the renewal applications and proceed with auctions was upheld.