State's exclusive privilege in liquor trade permits renewal conditions based on district-wide and cluster-level participation thresholds.

In brief

The question

1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise Policy 2025-2029 are manifestly arbitrary and violative of Article 14 of the Constitution by making an individual's renewal dependent on the conduct of third parties.

The court held

The Court dismissed the batch of writ petitions, upholding the validity of the impugned clauses.

It also directed

It held that the petitioners have no fundamental or statutory right to demand a renewal of a liquor license under Section 37 of the Act.

The cluster-based renewal system is a valid exercise of executive policy wisdom and is not "manifestly arbitrary."

Petitioners are estopped from challenging the policy after having participated in the process and signed undertakings to abide by its terms.

No relief was granted against the proposed e-auctions.

01Facts

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.

¶ 3-3.6

Under this new policy, the State introduced a "cluster" system (grouping 1 to 5 contiguous shops) and made the renewal of individual licenses contingent upon two collective conditions: (i) at least 70% of eligible licensees in a district must apply for renewal, and (ii) all shops within a specific cluster must be renewed.

¶ 3.1-3.3

The petitioners, despite being compliant and willing to renew, had their applications cancelled or ignored because either the district failed the 70% threshold or their cluster-mates did not apply, leading the State to put the entire clusters up for e-auction.

¶ 3.5

02Issues

i.1. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise Policy 2025-2029 are manifestly arbitrary and violative of Article 14 of the Constitution by making an individual's renewal dependent on the conduct of third parties.

¶ 3.6 / 4.3

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

¶ 5.2 / 6.3.1

iii.3. Whether the State's "exclusive privilege" in liquor trade exempts its policy decisions from judicial review under Article 226.

¶ 4.1 / 6.3.3

03Law Applied

The Court applied the doctrine that liquor is res extra commercium, meaning there is no fundamental right to trade in intoxicants under Article 19(1)(g).

¶ 6.3.1

It relied on Khoday Distilleries Ltd. v. State of Karnataka [(1995) 1 SCC 574] which establishes that the State holds "exclusive privilege" to regulate, prohibit, or create a monopoly in liquor.

¶ 6.3.2

However, it noted that State action must still satisfy the test of Article 14 regarding non-arbitrariness, as held in State of Kerala v. Unni.

¶ 4.1.2 / 6.3.3

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

¶ 5.2 / 6.5.3

Provisions in the judgment · 1 · Linked ones open on LawLens

rajasthan excise act, 1950 Section 37

04Reasoning

The Court reasoned that since there is no fundamental right to trade in liquor, the State possesses wide latitude in framing excise policies to optimize revenue and prevent illegal trade.

¶ 6.3.4-6.3.5

Regarding the "cluster" and "70% threshold" mechanics, the Court found these were rational policy tools intended to ensure "administrative uniformity" and "revenue stability" by preventing a scenario where only profitable shops are "cherry-picked" for renewal while non-viable shops remain unsettled, leading to unregulated bootlegging in those areas.

¶ 6.4.1-6.5.2

The Court rejected the plea of "economic coercion," noting that renewal is a voluntary contractual choice governed by the declared policy which the petitioners had explicitly accepted in their application undertakings.

¶ 6.6.2-6.6.3

It held that the linking of individual renewals to collective district/cluster performance does not constitute "hostile discrimination" but is a uniform regulatory framework applicable to all.

¶ 6.4.3