### State’s exclusive privilege in liquor trade permits cluster-based renewal conditions and district-wide 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 this new policy, the State introduced "clusters" (grouping 1–5 shops) and made the renewal of individual licenses conditional upon: (a) at least 70% of eligible licensees in a district applying for renewal, and (b) all shops within a specific cluster opting for renewal.

The petitioners’ renewal applications were rejected/cancelled because certain shops within their assigned clusters remained unrenewed, leading the Department to propose settling those clusters via public e-auction.

The petitioners alleged these conditions were arbitrary and coercive.

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

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

3. Whether the State's "exclusive privilege" in liquor trade exempts its policy decisions from judicial review.

The Court applied the doctrine of "Res Extra Commercium," establishing that there is no fundamental right to trade in liquor under Article 19(1)(g).

It relied on the landmark precedent *Khoday Distilleries Ltd. vs. State of Karnataka (1995)*, which clarifies that while the State holds "exclusive privilege" over intoxicants, its regulatory methods must still satisfy the non-arbitrariness test of Article 14.

Statutory weight was given to Section 37 of the Rajasthan Excise Act, 1950, which explicitly mandates that no person has a claim to the renewal of a license.

The Court also invoked the principle of "Estoppel," noting that participants who accept policy terms cannot challenge them after an unfavorable outcome.

The Court reasoned that since liquor trade is a managed privilege rather than a right, the State possesses wide latitude to frame policies for revenue optimization and administrative efficiency.

The 70% district-wide threshold and the cluster mechanism were found to be rational tools aimed at preventing "fallow areas" (unserved locations) and ensuring uniform revenue collection across all shops, including less profitable ones.

The Court rejected the argument of "economic coercion," holding that renewal is a voluntary choice subject to the State’s pre-declared conditions.

Furthermore, the Court observed that the petitioners had signed undertakings agreeing to the policy conditions, thereby estopping them from challenging the criteria once their clusters failed to meet the renewal quota.

The Court emphasized that it cannot substitute its own "policy wisdom" for that of the executive in fiscal matters unless there is "manifest arbitrariness," which was not proven here.

It ruled that the petitioners have no vested right to renewal under Section 37 of the Rajasthan Excise Act and that the State acted within its regulatory privilege to ensure stable revenue settlement through the cluster system.

The final holding dismissed the entire batch of writ petitions, vacating any interim relief and upholding the validity of the Excise and Temperance Policy 2025–2029.