State's exclusive privilege in liquor trade permits renewal conditions based on district-wide participation and cluster 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 *Excise and Temperance Policy 2025–2029*.

Under this new policy, the State introduced a "cluster" system where shops are grouped (1 to 5 shops) for settlement.

Renewal of an individual license was made conditional 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.

The petitioners’ renewal applications were rejected because certain shops within their assigned clusters remained unrenewed, leading the Department to slate the entire clusters for public e-auction.

The petitioners alleged these clauses were arbitrary, coercive, and violated Article 14 by making their right to renewal dependent on the actions of third parties.

1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise and Temperance Policy 2025–2029 are Mid-manifestly arbitrary or discriminatory under Article 14 of the Constitution.

2. Whether a licensee has a fundamental or vested 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 despite the *res extra commercium* doctrine.

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. v. State of Karnataka [(1995) 1 SCC 574]*, which clarifies that while the State holds "exclusive privilege" over intoxicating liquors, its regulatory methods must not be arbitrary or discriminatory under Article 14.

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

The Court also referenced Article 47 (Directive Principles) regarding the State's duty to regulate or prohibit intoxicating drinks.

The Court reasoned that since the liquor trade is a regulated privilege and not a right, the State possesses wide discretion to frame policies based on revenue optimization and administrative efficiency.

It found that the 70% district-wide threshold and the cluster-linked renewal conditions were not "manifestly arbitrary" but were rational mechanisms to prevent "fallow areas" and fragmented settlements which could lead to illegal liquor trade.

The Court rejected the plea of "economic coercion," noting that renewal is a voluntary choice and licensees had accepted the policy terms—including the cluster conditions—when submitting their applications; they were thus estopped from challenging them after failing to secure a renewal.

Furthermore, the Court held that it cannot substitute its own wisdom for executive policy regarding fiscal or revenue matters unless a clear constitutional transgression is proven, which was absent here.

(1) no fundamental or vested right to renewal exists under the Rajasthan Excise Act;

(2) the cluster system and 70% threshold are rational policy tools for revenue stability and uniform administration;

(3) the petitioners, having participated in the process with full knowledge of the conditions, could not later challenge them.

All pending applications were disposed of accordingly.