State may make liquor license renewal conditional upon district-wide and cluster-based participation 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 Excise and Temperance Policy 2025-2029.

Under the new policy, the State introduced "clusters" of 1–5 shops and made the renewal of individual licenses contingent upon two factors: (a) a district-wide renewal rate of at least 70%, and (b) all shops within a specific cluster applying for renewal.

The petitioners’ applications for renewal were rejected or cancelled because either their specific clusters had unrenewed shops or the district had not met the 70% threshold, leading the State to propose settlement via e-auction.

The petitioners argued these clauses were arbitrary and coercive.

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

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 "exclusive privilege" in the liquor trade exempts its policy decisions from judicial review.

The Court applied the principle that trade in liquor is res extra commercium, meaning there is no fundamental right to carry on such business under Article 19(1)(g).

It relied on the landmark precedent Khoday Distilleries Ltd. v. State of Karnataka [(1995) 1 SCC 574], establishing that the State holds "exclusive privilege" over intoxicating liquors and can create a monopoly or impose heavy restrictions.

Statutory authority was drawn from Sections 9A and 37 of the Rajasthan Excise Act, 1950, the latter specifically stating that no person has a claim to renewal or compensation upon non-renewal.

The Court also referenced Article 47 of the Constitution (Directive Principles) regarding the State's duty to endeavor toward prohibition.

The Court reasoned that since liquor trade is a regulated privilege rather than a right, the State enjoys wide "executive wisdom" to optimize revenue and prevent illegal trade.

It found that the 70% district threshold and the cluster mechanism were rational policy tools intended to ensure "administrative efficiency" and prevent "fallow or unregulated areas" where unlifted shops might otherwise lead to bootlegging.

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

It further observed that the petitioners were estopped from challenging the policy after having participated in the renewal process and signing undertakings to abide by its conditions.

The Court concluded that the policy applied uniformly across the State and did not manifest "hostile discrimination" or "patent arbitrariness" required to trigger judicial intervention.

It affirmed that no licensee has a fundamental or vested right to renewal under Section 37 of the Rajasthan Excise Act.

Consequently, the Court dismissed the entire batch of writ petitions, refusing to quash the auction notices or direct the renewal of the petitioners' licenses.