The successful sheriff court challenge by Glasgow Indian restaurant The Dhabba has also paved the way for an expansion of the city's efforts at a Mediterranean cafe culture and will heap further embarrassment on the city's licensing board.
Sheriff Stuart Reid described the board's decision as illogical and said it was based on a "precarious factual foundation".
The restaurant's application to allow a 24-seat outdoor area for diners was originally refused in July 2011 on the basis the area was "unsuitable for the sale of alcohol" and that pedestrians would be inconvenienced, resulting in a "public nuisance".
That decision was challenged, with the restaurant's representatives arguing that "there was no material before the board to support its conclusions". Lawyers also argued that the decision was irrational as planning permission had been granted for the tables. In just one meeting of the board in early autumn, Yo! Sushi was denied permission to serve alcohol to patrons eating outside the House of Fraser on Buchanan Street, while new Italian restaurant Barolo was refused an outside licence for some tables on Gordon Street, where TGI Friday's and the Bier Halle Republic already enjoy such privileges.
The move led to concerns within the licensed and retail trade that Glasgow was reversing its policy of encouraging a cafe culture.
Eddie Doull, of legal firm Brunton Miller, successfully fought the ban.
He said: "Sheriff Reid agreed there was no factual basis for the board's conclusion. We already had planning permission and the farce is people could eat and drink soft drinks but congestion was only an issue when alcohol was in the equation. They'd nothing to support how they reached that view."
Other experts said the sheriff's decision could undermine business confidence in the decision-making process at the licensing board.
Frances Ennis, whose team at McGrigors was responsible for the landmark lap-dancing case which helped clarify the scope of powers available to a board last year, said: "It seems very clear from the sheriff's remarks that the licensing board was once again found to be overstepping the mark.
"If planning permission had been allowed for an outdoor seating area, it is not within the board's powers to then restrict the alcohol on the basis that it would lead to congestion on the footpath – that really was not their call to make.
"To many in the Glasgow hospitality community there is a view that the board has at times made life extremely difficult for responsible operators who want to see Glasgow expand its more continental-style 'café culture'."
A Glasgow City Council spokesman said: "In general terms the board fully understands that outside drinking areas can be an attractive feature and add to the overall vibrancy of the city.
"All decisions by the board are based on the merits of an individual case and made with respect to all five licensing objectives." The Dhabba said it would comment when the time had lapsed for the council to appeal.