State's exclusive privilege in liquor trade validates cluster-based renewal thresholds despite absence of fundamental rights.

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.

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

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

The petitioners’ renewal applications were cancelled because certain shops within their assigned clusters remained unrenewed, leading the State to propose a fresh auction of the entire cluster.

The petitioners alleged these clauses were arbitrary, coercive, and violated Article 14.

1. Whether a citizen has a fundamental right to trade in liquor or an inherent right to the renewal of a liquor license under the Rajasthan Excise Act?

2. Whether Clauses 2.2.6, 2.2.7, and 2.2.8 of the Excise Policy 2025–2029 are manifestly arbitrary, discriminatory, or violative of Article 14 of the Constitution?

3. Whether the State can link the renewal rights of a compliant licensee to the conduct of other licensees or district-wide renewal thresholds?

The Court applied the principle that trade in potable liquor is res extra commercium, and thus, a citizen has no fundamental right under Article 19(1)(g) to engage in such business, as established in Khoday Distilleries Ltd. v. State of Karnataka.

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

The Court also invoked the doctrine of "Limited Judicial Review" in policy matters, holding that executive decisions regarding revenue and administration are not to be interfered with unless they suffer from "manifest arbitrariness".

The Court reasoned that since liquor trade is a State privilege and not a right, the State possesses wide discretion to determine the mode of settlement for revenue optimization.

It held that the 70% district threshold and the cluster-based renewal system are rational policy tools intended to prevent "fallow areas" (unserved locations) and ensure administrative stability.

The Court rejected the argument of "economic coercion," noting that renewal is voluntary and subject to predefined conditions which the petitioners accepted upon application.

The grouping of contiguous shops into clusters was deemed an administrative exercise for revenue protection, and linking individual renewals to cluster-wide participation was found to have a rational nexus with the objective of ensuring all shops in a cluster are lifted simultaneously.

Finally, the Court noted that the overwhelming majority of licensees (6,420 out of 7,665) complied with the policy, further negating the plea of it being unworkable or arbitrary.

The Court upheld the constitutional validity of Clauses 2.2.6, 2.2.7, and 2.2.8, finding them to be neither arbitrary nor discriminatory.

It was held that petitioners who participated in the process with full knowledge of the conditions were estopped from challenging them after failing to secure renewal.

All writ petitions were dismissed, and no relief was granted against the proposed auctions.