State's exclusive privilege in liquor trade permits cluster-based renewal thresholds and rationalized settlement policies.

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.

The new policy introduced a "cluster" system where 1 to 5 contiguous shops were grouped together.

Under the impugned clauses, renewal of an individual license was made contingent upon: (i) at least 70% of eligible licensees in the district applying for renewal, and (ii) all shops within a specific cluster opting for renewal.

The petitioners’ renewal applications were rejected because certain shops within their assigned clusters remained unrenewed, leading the Department to cancel the renewals and propose a fresh cluster-wise e-auction.

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

3. Whether the State’s exercise of its "exclusive privilege" in liquor trade is subject to judicial review under Article 226.

The Court applied the principle that there is no fundamental right to trade in liquor, as it is res extra commercium, and the State holds "exclusive privilege" over its regulation per Entry 8 and 51 of List II.

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 "manifestly arbitrary" under Article 14.

The Court further applied 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 falls within the executive domain of "fiscal wisdom" intended to optimize revenue and prevent illegal trade in "fallow" or unsettled areas.

It held that the 70% district threshold and the cluster-based renewal requirements were rational mechanisms to ensure administrative stability and collective responsibility among vendors.

The Court rejected the argument of "economic coercion," noting that renewal is a voluntary choice and not a vested right.

Crucially, the Court found that the petitioners were estopped from challenging the policy because they had participated in the renewal process and signed undertakings accepting the policy terms.

Since the policy applied uniformly to all districts and licensees, and the grouping of contiguous shops was a valid administrative exercise, there was no "hostile discrimination" or lack of "intelligible differentia."

It ruled that a citizen has no fundamental or vested right to the renewal of a liquor license.

The High Court dismissed the entire batch of writ petitions, affirming that the State’s cluster-based auction system is a valid exercise of its regulatory power.

No relief was granted to the petitioners to renew their individual licenses outside the cluster framework.