Winchester's Moloko bar should not be allowed to open beyond normal licensing hours, says the city council.
The decision was based on police reports, which the licensees of the bar, in The Square, said were inaccurate.
They have given notice of appeal and the present opening hours will remain until magistrates hear the case.
"Last orders" is presently 11pm for Sunday, midnight for Monday, Tuesday and Wednesday, 2am for Friday and 1am for Thursday and Saturday.
The present licensees, Gillian Heath, who took on her role six months ago, and James Sawyer, a barman who was promoted last month, want to extend Moloko's capacity from 250 to 330.
They also wish to take over the public entertainment licence, which permits alcohol sales after 11pm. It is currently held by Mrs Heath's husband, David, and former licensee, Jonathan Turpin.
The licensing committee heard that Mr Turpin was convicted last month on six counts of selling alcohol to under-18s at Moloko. He has appealed against the decision.
Peter Saville, lawyer for Hampshire Constabulary, said: "The police have concerns about the management of these premises."
The force is currently lobbying to revoke the bar's licence and magistrates are due to decide the matter in February.
Officers provided the committee with a 24-page dossier on inspections and reported crimes at Moloko since August, 2002.
Despite the arrival of new licensees, police say the bar is still causing them concern.
"It will make absolutely no difference whose name is on the public entertainment licence," added Sergeant Steve French.
Kenneth Pain, lawyer for Moloko, said: "Since Mrs Heath and Mr Sawyer have been the licensees, there have been no serious complaints about the running of the premises."
He argued that the police evidence was unsound because it came from bitter ex-employees and unhappy customers. "It's all innuendo and unsubstantiated intelligence given by people who clearly have an axe to grind."
Mr Pain said Mrs Heath was so unhappy about the evidence that she planned to sue the city council for publishing the dossier.
Lib-Dem, John Beveridge, whose ward includes the bar, defended the police. "There's such a quantity of evidence there that I will suggest that some of it must be true."
Shirley Reed, warden at Bishop Morley's College, a sheltered home for elderly widows, around 50 yards from the bar, said customers leaving Moloko often created noise late at night. She invited members to stand in her lounge and experience it for themselves.
"Sometimes I still have to take sleeping tablets on a Friday night to ensure a good night's rest," added Mrs Reed.
Mr Pain said it was unfair to blame Moloko for all alcohol-related disturbances in Winchester.
Mrs Heath added: "I'm afraid we're a victim of our own popularity. Everyone wants to drink in our bar and that's why our name gets banded around so much."
Members discussed the application for around an hour behind closed doors before refusing it. Chairman, Robert Johnston, said: "We've seen no compelling evidence that there will be any material change in the way the premises are managed."
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