### State’s exclusive privilege in liquor trade permits cluster-based renewal thresholds and revenue-driven policy restrictions.

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 Rajasthan Excise & Temperance Policy 2025–2029.

The State introduced a "cluster" system where shops (1 to 5) were grouped for settlement.

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

The petitioners’ renewal applications were rejected or cancelled because either the district failed the 70% threshold or fellow cluster members did not apply, leading the State to put the clusters up for 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 by making an individual's renewal dependent on third-party actions.

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

3. Whether the State's "cluster" mechanism and district-wide renewal thresholds fall within the permissible scope of executive policy-making and the State's "exclusive privilege" over intoxicants.

The court applied the principle of "Res Extra Commercium," establishing that there is no fundamental right to trade in liquor under Article 19(1)(g), as held in Khoday Distilleries Ltd. v. State of Karnataka (1995).

It relied on Section 37 of the Rajasthan Excise Act, 1950, which stipulates that no person has a claim to the renewal of a license.

The court further applied the doctrine of State’s Exclusive Privilege under Entry 8 and 51 of List II, Seventh Schedule, noting that while the State must not act with "manifest arbitrariness" under Article 14, it possesses wide discretion in revenue optimization and regulatory strategy.

Finally, the principle of Estoppel was applied, as petitioners participated in the renewal process after accepting the policy's terms.

The court reasoned that since liquor trade is a privilege and not a right, the State is entitled to frame policies that maximize revenue and prevent unregulated "fallow areas."

It found that the 70% district threshold and cluster-level requirements were rational administrative tools to ensure stability and uniform settlement across the state.

The court rejected the petitioners' argument of "economic coercion," stating that renewal is voluntary and the State cannot be forced to selectively renew only high-profit shops while leaving non-viable ones unsettled.

Regarding Article 14, the court held that the policy applies uniformly to all districts and licensees; therefore, no "hostile discrimination" existed.

The court emphasized that it cannot substitute its own wisdom for executive policy unless the policy is patently capricious, which the petitioners failed to prove.

It held that licensees have no vested right to renewal and are bound by the policy conditions they initially accepted.

The High Court dismissed the entire batch of writ petitions, refusing to quash the auction notices or direct the renewal of the petitioners' licenses.

All stay applications and pending applications were subsequently disposed of.