State may make liquor license renewal conditional upon district-wide and cluster-based participation thresholds.

The petitioners, existing liquor licensees in Rajasthan, challenged the "Rajasthan Excise & Temperance Policy 2025–2029" issued on 29.01.2025.

The policy introduced a "cluster" system (grouping 1–5 shops) and mandated that license renewals in a district would only occur if 70% of eligible licensees applied for renewal and all shops within a specific cluster opted in.

The petitioners’ renewal applications were cancelled or not considered because certain shops within their assigned clusters remained unrenewed or the 70% district threshold was not met.

This led the State to propose settling those shops via e-auction.

The petitioners alleged these clauses were arbitrary, discriminatory, and amounted to economic coercion.

1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise & Temperance Policy 2025–2029 are constitutionally valid under Article 14 of the Constitution of India.

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

3. Whether the State's exercise of its "exclusive privilege" in liquor trade is subject to judicial review on the grounds of arbitrariness.

The Court applied the principle that there is no fundamental right to trade in liquor under Article 19(1)(g) as it is res extra commercium.

The State holds "exclusive privilege" over intoxicants under Entries 8 and 51 of List II, Seventh Schedule.

It relied on Khoday Distilleries Ltd. v. State of Karnataka [(1995) 1 SCC 574] to affirm that while the State has a monopoly, its methods must not be discriminatory or arbitrary under Article 14.

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

The Court reasoned that the formulation of excise policy is a matter of executive wisdom involving fiscal considerations and revenue optimization, where judicial interference is limited to "manifest arbitrariness".

It found the 70% district threshold and the cluster mechanism to be rational policy tools intended to ensure administrative stability and prevent "fallow areas" where illegal liquor trade might flourish if less-profitable shops remained unsettled.

The Court rejected the argument of discrimination, noting the policy applies uniformly across the State.

Furthermore, the Court observed that the petitioners had accepted the policy's terms by signing the renewal application forms, thus creating an estoppel against challenging those very terms after failing to secure a renewal.

The grouping of contiguous shops was deemed an administrative exercise within the Excise Commissioner’s competence.

It answered that there is no fundamental or vested right to renewal, and the State’s policy choices to maximize revenue and regulate trade are within its executive domain.

Consequently, the High Court dismissed the batch of writ petitions and upheld the cancellation of the petitioners' renewal applications in favor of the cluster auction process.