### State’s exclusive privilege in liquor trade permits renewal conditions based on district-wide participation and cluster-based settlement.

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 Policy introduced a "cluster" system where shops (1-5 units) were grouped together for settlement.

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

If these conditions were not met, the shops were subject to e-auction.

The petitioner’s renewal application was cancelled because one shop in her cluster remained unrenewed, leading the department to propose a cluster-wide auction.

The Court applied the principle that there is no fundamental right to trade in liquor under Article 19(1)(g), as it is res extra commercium; rather, it is a privilege exclusively vested in the State.

Reliance was placed on Khoday Distilleries Ltd. v. State of Karnataka [(1995) 1 SCC 574] to establish that the State can create a monopoly and impose restrictions different from ordinary trades.

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

The Court further applied the doctrine of "limited judicial review" over executive policy matters, holding that courts cannot substitute policy wisdom unless there is patent illegality or manifest arbitrariness.

The Court reasoned that since liquor trade is a regulated privilege and not a right, the State possesses wide discretion to determine the method of settlement to optimize revenue and prevent unregulated "fallow" areas.

It rejected the petitioners' argument of arbitrariness, noting that the 70% district-wide threshold and the cluster-based renewal requirements were uniform policy mechanisms intended to ensure administrative stability and fiscal security.

The Court found that linking an individual’s renewal to the cluster's collective participation did not violate Article 14, as the State is entitled to adopt collective settlement models for revenue purposes.

Additionally, the Court noted that the petitioners had submitted their renewal applications after expressly accepting the policy's terms and conditions, and were thus estopped from challenging them after failing to secure a renewal.

The Court answered that there is no fundamental or vested right to the renewal of a liquor license, and the cluster mechanism is a valid exercise of the State’s executive and legislative competence under Entries 8 and 51 of List II.

The challenges to the cancellation of renewal applications and the subsequent auction processes were rejected as the petitioners failed to demonstrate any hostile discrimination or mala fides.