State's exclusive privilege over liquor trade allows cluster-based licensing and conditional renewals without violating Article 14.

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*.

This new policy introduced a "cluster" system where shops (1 to 5) were grouped together for settlement.

Under the impugned clauses, 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.

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

The petitioners, despite submitting valid renewal applications and fees, had their renewals cancelled because either the district threshold was not met or other shops in their cluster remained unrenewed.

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

2. Whether the State’s exclusive privilege in liquor trade exempts its policy decisions from judicial review on the grounds of fairness and non-arbitrariness.

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

The Court primarily applied the principle that there is no fundamental right to trade in liquor under Article 19(1)(g), as liquor is *res extra commercium* and the State holds "exclusive privilege" over its trade.

This doctrine was drawn from *Khoday Distilleries Ltd. v. State of Karnataka (1995)*.

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

While the Court acknowledged that State action must satisfy the test of Article 14 (non-arbitrariness), it relied on the principle that the Court will not substitute its wisdom for executive policy in fiscal and regulatory matters unless there is "manifest arbitrariness."

The Court reasoned that because the liquor trade is a regulated privilege rather than a right, the State has broad discretion to determine the method of settlement to optimize revenue and prevent illegal trade in "fallow areas."

The Court found that linking renewal to a 70% district threshold and cluster-wide participation was a rational regulatory mechanism intended to ensure administrative stability and fiscal certainty.

The Court rejected the argument of "economic coercion," noting that renewal is voluntary and subject to the policy's declared terms.

Furthermore, since the petitioners had applied for renewal with full knowledge of these conditions and had given undertakings to abide by the policy, they were estopped from challenging those conditions after being denied renewal.

The grouping of shops into clusters was deemed an administrative exercise for revenue stability that did not inherently violate Article 14.

It ruled that no fundamental or vested right to renewal exists.

The Court held that the policy operates uniformly and falls within the executive's domain of "policy wisdom," which is beyond the scope of judicial substitution.

Consequently, the High Court dismissed the batch of writ petitions and upheld the cancellation of the petitioners' renewal applications in favor of the e-auction process.