Liquor licence renewal policy found arbitrary where renewal was abolished without revenue nexus, but writ directions were narrowed.

In liquor licensing, the State may regulate the trade and revise fiscal conditions to augment excise revenue, but it cannot abolish an existing renewal regime without a nexus to that object. The Court found the abrupt cancellation of renewal for existing retail liquor licences and replacement by fresh draw of lots arbitrary, while also holding that writ directions granting renewal in a fixed manner went beyond the proper scope of mandamus. Renewal was therefore left to the competent authority under the governing rules, subject to applicable conditions, including minimum off-take and enhanced privilege fee.

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Issues: Whether the Government order cancelling renewal of existing retail liquor licences and requiring fresh allotment by draw of lots for the excise year 2002-2003 was arbitrary and unsustainable, and whether the High Court's directions protecting renewal required modification.

Analysis: Trade in intoxicating liquor is subject to strict State control and no citizen has an inherent right to carry on such business as of right. The State may regulate the trade to augment excise revenue and may revise the privilege fee, re-categorise shops, and alter conditions such as minimum off-take. However, the earlier excise policy and the amended retail vending rules contemplated renewal of existing licences for the block period, and the abrupt abolition of renewal with a fresh draw of lots had no nexus with revenue augmentation. The change was found to be aimed at replacing existing licensees rather than advancing the stated fiscal object, and was therefore arbitrary. At the same time, the High Court's directions granting renewal in a particular manner went beyond the proper scope of mandamus and had to be aligned with the statutory scheme.

Conclusion: The challenge to the Government order failed; the policy denying renewal to existing licensees was upheld as arbitrary by the High Court and that conclusion was affirmed, while the directions were modified so that renewal applications would be considered by the competent authority in accordance with law and on the applicable conditions, including minimum off-take and enhanced privilege amount.

Final Conclusion: The special leave petitions were dismissed, with only the operative directions on renewal and related conditions being adjusted to conform to the rules and statutory authority.

Ratio Decidendi: In liquor licensing matters, the State may regulate and revise fiscal conditions to augment revenue, but a policy that abolishes an existing renewal regime without nexus to that object is arbitrary; renewal questions must then be decided by the competent authority under the governing rules rather than by an overbroad writ direction.

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