Sarah Darville Diablo Royale’s back garden.

The tequila may have to stop flowing in a few months at Diablo Royale Este. The embattled Mexican restaurant won’t have a liquor license come September unless its owner, Jason Hennings, files a special proceeding against New York State, according to a State Liquor Authority spokesperson.

At a hearing last month, the authority told Mr. Hennings it would renew his liquor license only if he agreed to close down his restaurant’s back garden earlier. Since 2010, neighbors have claimed they’ve lost sleep because customers are allowed to linger on the patio after-hours.

Stipulations in Diablo’s license dictate that the patio be closed at 10 p.m. on weeknights and 11 p.m. on weekends, but Andrew Coamey and Meri Micara, who live adjacent the restaurant, have testified in the past that the curfew hasn’t been honored. At the May hearing, Ms. Micara complained to the S.L.A. that her front door “is always blocked, music fills the building, the backyard noise is unbearable.” Michele Burger, appearing on behalf of Council Member Rosie Mendez, showed support for the residents, and said of Diablo, “[They] just aren’t being good neighbors.”

Presented with timestamped photos allegedly showing customers using the patio after-hours, the restaurant’s owner grew visibly irritated. “It’s not people,” he said. “They’re black chairs.” Even S.L.A. chairman Dennis Rosen said he couldn’t tell what the pictures showed.

Sarah Darville Apartments above the garden.

“I’ve been religious about closing the back patio,” said one of Diablo’s managers. “I close the patio door fifteen minutes prior. I have my hostesses and servers ask our guests to move inside.”

The Liquor Authority made an offer to renew Diablo’s liquor license if Mr. Hennings agreed to close the back patio at 9 p.m. during the week and 10 p.m. on weekends for a year, after which, it said, it might consider extending the hours of operation. But Mr. Hennings refused to accept the terms, causing the authority to deny the renewal.

Multiple past violations didn’t help: records show the bar was smacked with a $1,000 fine for using the name Diablo Royale without permission from the Liquor Authority in September 2010, earned another $3,500 fine for improperly obstructed exits and serving alcohol to people under 21 in September 2010, and in May 2011 it earned a combined $6,000 in fines for continuing to use the Diablo Royale name, for serving people under 21, and for operating an unlicensed service bar for staff in the basement.

The restaurant’s liquor license expired last December; since then, it had been operating under a provision that allowed an extension while the authority mulled over the case. Under standard operating procedure, Diablo now has four months from the time of last month’s denial to file a proceeding against the liquor authority. Last week, a representative of the authority said that no such proceeding had been initiated.

For now, the garden space is open for business. But a flyer in the restaurant’s front window hints at the situation, asking those with complaints to e-mail complaints@diabloroyale.com or call the restaurant’s phone number. Mr. Hennings, who has referred to his situation as a “witch hunt” at previous community board meetings and last month told the authority that the testimony of his neighbors was “an egregious misuse of this process,” did not respond to The Local’s requests for comment.