State's exclusive privilege over liquor trade permits cluster-based renewal thresholds without violating Article 14.

The Finance (Excise) Department of Rajasthan issued the "Excise and Temperance Policy 2025–2029" on 29.01.2025, introducing a "cluster" system for retail liquor shops.

Under Clauses 2.2.6, 2.2.7, and 2.2.8, the renewal of existing licenses for 2025-26 was made conditional: a district required a 70% overall renewal rate, and all shops within a specific cluster (1–5 contiguous shops) had to apply for renewal.

The petitioner, an existing licensee in Barmer, applied for renewal, but because another shop in her assigned cluster remained unrenewed, her application was cancelled, and the cluster was slated for e-auction.

The petitioners challenged the constitutional validity of these clauses, alleging they were arbitrary and discriminatory.

The Court applied the "Privilege Doctrine" regarding intoxicants under Entry 8 and Entry 51, List II of the Seventh Schedule and the Directive Principles under Article 47 of the Constitution.

It relied on Khoday Distilleries Ltd. v. State of Karnataka [(1995) 1 SCC 574] to establish that there is no fundamental right to trade in liquor (res extra commercium), and the State holds exclusive privilege.

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.

The principle of "Limited Judicial Review" in policy matters was applied, holding that courts should not substitute executive wisdom unless there is manifest arbitrariness.

The Court reasoned that since liquor trade is a privilege and not a right, the State possesses wide discretion to determine settlement methods, including clustering aimed at preventing "fallow areas" and revenue leakage.

The 70% district threshold and cluster-unanimity requirements were found to be rational policy tools for administrative stability and revenue optimization, applying uniformly to all districts without creating a hostile classification.

The Court rejected the argument of "economic coercion," noting that renewal is a voluntary choice subject to the State's declared conditions.

Furthermore, the Court observed that the petitioners were estopped from challenging the policy after having participated in the renewal process and signed undertakings accepting its terms.

The Court affirmed that there is no fundamental or statutory right to renewal under the Rajasthan Excise Act.

The High Court dismissed the entire batch of writ petitions, upholding the State’s right to cancel renewal applications and proceed with cluster-wise e-auctions where policy conditions were not met.