State policy linking liquor license renewal to district-wide and cluster-based participation thresholds does not violate Article 14.

The petitioners, existing liquor licensees, challenged the constitutional validity of Clauses 2.2.6, 2.2.7, and 2.2.8 of the Rajasthan Excise & Temperance Policy 2025–2029.

Under the new policy, the State introduced a "cluster" system (grouping 1–5 shops) and mandated that renewal of individual licenses in a district was conditional upon at least 70% of eligible licensees in that district opting for renewal.

If the 70% threshold was not met, or if any shop within a cluster remained unrenewed, the shops were to be settled via e-auction.

The petitioners, who had applied for renewal and paid fees, had their applications cancelled because their shops were part of clusters where other shops remained unrenewed or the district threshold was not met.

They alleged these clauses were arbitrary and coercive.

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

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

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 and its regulation is an "exclusive privilege" of the State.

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

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

The doctrine of estoppel, where participants who accept policy terms cannot challenge them after an unfavorable outcome.

The Court reasoned that excise policy is a matter of "executive wisdom" aimed at revenue optimization and preventing illegal trade in "fallow areas".

It found that the 70% district threshold and cluster systems are rational regulatory tools to ensure "substantial participation" and "administrative uniformity".

The Court rejected the argument of "economic coercion," noting that renewal is voluntary and the State is not obliged to permit the selective renewal of only profitable shops while leaving non-viable ones unsettled.

Regarding Article 14, the Court held that the policy applies uniformly to all districts and licensees, and the linking of individual renewal to cluster/district performance does not constitute "hostile discrimination".

Finally, it noted that the petitioners had signed undertakings accepting these policy conditions when applying for renewal, thus estopping them from challenging the criteria post-facto.

It ruled that liquor trade is a regulated privilege and the petitioners have no vested right to renewal under Section 37 of the Rajasthan Excise Act.

The Court declined to substitute its judgment for executive policy wisdom.

Consequently, the batch of writ petitions was dismissed, and the cancellation of renewal applications and subsequent auction proceedings were upheld.