State's exclusive privilege in liquor trade permits renewal conditions based on district-wide and cluster-based 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 the new policy, the State introduced "clusters" of 1–5 shops.

Clause 2.2.6 made license renewal conditional upon 70% of eligible licensees in a district applying for renewal and all shops within a specific cluster opting in.

If the 70% threshold was not met, all shops in that district were to be settled via e-auction.

The petitioners, despite fulfilling individual eligibility and paying fees, had their renewals cancelled because either the 70% district threshold was not met or other shops in their assigned clusters remained unrenewed, triggering a cluster-wide auction.

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

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

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

It relied on Khoday Distilleries Ltd. v. State of Karnataka [(1995) 1 SCC 574], which clarifies that the State holds "exclusive privilege" over intoxicating liquors and can create a monopoly or impose restrictive regulations.

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

Finally, the Court noted that while liquor trade is a privilege, State action must still satisfy the test of non-arbitrariness under Article 14, though judicial interference in economic policy is highly circumscribed.

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

The Court rejected the petitioners' argument that the 70% renewal threshold was arbitrary, finding it a rational mechanism to ensure substantial participation and stability in the transition to the cluster system.

Linking an individual’s renewal to the collective conduct of a cluster or district was deemed a valid exercise of regulatory power to prevent "fallow" or unserved areas that might encourage illicit trade.

The Court emphasized that the petitioners participated in the renewal process with full knowledge of these conditions and signed undertakings to that effect, thereby estopping them from challenging the policy after failing to secure a benefit.

It concluded that the petitioners failed to demonstrate "manifest arbitrariness," as the rules applied uniformly to all prospective and existing licensees across the State.

The Court held that an existing licensee has no vested right to renewal and that the State’s policy choice to use clusters and percentage-based thresholds for renewal falls within executive wisdom, which is not subject to judicial substitution.

All writ petitions were dismissed/no relief granted.