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

In brief

The question

1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise Policy 2025-2029 are constitutionally valid under Article 14 or are manifestly arbitrary.

The court held

The Court answered that the impugned clauses are constitutionally valid and do not suffer from manifest arbitrariness.

It also directed

It held that there is no fundamental or vested right to the renewal of a liquor license.

The Court declined to interfere with the executive's policy wisdom and dismissed the entire batch of writ petitions.

All pending applications were disposed of accordingly.

01Facts

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

¶ 3

The policy introduced a "cluster" system (grouping 1–5 shops) and set a district-wide renewal threshold.

¶ 3.1

Under Clauses 2.2.6 and 2.2.7, renewal of an individual license was made conditional upon 70% of eligible licensees in that district applying for renewal and all shops within a specific cluster opting for renewal.

¶ 3.3

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

¶ 3.5-3.6

The petitioners alleged these clauses were arbitrary, result in economic coercion, and violate Article 14 of the Constitution.

¶ 4.3

02Issues

i.1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise Policy 2025-2029 are constitutionally valid under Article 14 or are manifestly arbitrary.

¶ 2, 6.3.3

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

¶ 4.1, 5.2

03Law Applied

The Court applied the principle that there is no fundamental right to trade in liquor under Article 19(1)(g), as liquor is res extra commercium; rather, it is an exclusive privilege of the State.

¶ 6.3.1

This was anchored in the precedent of Khoday Distilleries Ltd. v. State of Karnataka (1995).

¶ 6.3.2

The Court also invoked Section 37 of the Rajasthan Excise Act, 1950, which stipulates that no person has a claim to the renewal of a license.

¶ 6.5.3

Regarding judicial review, the Court followed the doctrine that executive policy in fiscal and regulatory matters is subject only to a test of "manifest arbitrariness" under Article 14, and courts should not substitute their wisdom for that of the executive.

¶ 6.3.4-6.3.5

Provisions in the judgment · 1 · Linked ones open on LawLens

rajasthan excise act, 1950 Section 37

04Reasoning

The Court reasoned that since the State holds an exclusive privilege over intoxicants (Entries 8 and 51, List II), it has wide discretion to determine the method of settlement to optimize revenue and prevent illegal trade.

¶ 6.1-6.3

The 70% district-level threshold and cluster requirements were viewed as rational policy tools to ensure "substantial participation" and "stability in settlement" rather than arbitrary hurdles.

¶ 6.4.1-6.4.2

The Court found no evidence that the cluster grouping lacked a rational nexus to the objective of preventing "fallow" or unregulated areas.

¶ 6.5

Furthermore, the Court noted that the petitioners had accepted these terms when they originally applied for renewal, and they were therefore estopped from challenging the policy after the outcome proved unfavorable.

¶ 6.6.2-6.6.3

The system was found to be uniform and non-discriminatory.

¶ 6.7