A pub landlord who has lost an appeal to have a railway carriage restaurant in his beer garden said yesterday: "I could go bankrupt."

Fred Courcha sparked a row with planners after installing the unusual restaurant immediately to the east of the Gardener's Arms in Sompting, near Worthing.

Adur Council had previously given permission for the Pullman carriage to be used as a restaurant. But Mr Courcha used a 1962 standard British Rail carriage, meaning he had to apply for retrospective planning permission which was refused.

The council, responding to complaints from neighbours who said the carriage overlooked their gardens, issued an enforcement notice and Mr Courcha launched an appeal. The Planning Inspectorate yesterday announced he has lost his fight and Mr Courcha will have to remove the carriage, which cost him £80,000.

He said: "I do not know what to do now, but I will fight on. I want to get my Euro MP involved so will have to wait and see who it is after the election and then I can see if this can be taken to a European court.

"I am also planning to see the Local Government Ombudsman. If I have to take it out I will go bankrupt. I borrowed money for the carriage."

Mr Courcha, 57, said he might have to axe jobs if the carriage was removed from the pub, which he has run for more than 20 years. He said everyone liked the carriage and he had painted it in a similar style to a Pullman.

The 31 tonne carriage has been converted into a 100-seat buffet car complete with BR livery.

The carriage was formerly used by the Army for training and was based at a siding in Alresford, Hampshire. It was lifted into the pub in 1999.

A spokesman for the Planning Inspectorate said: "These plans are so fundamentally and materially different to the railway carriage on the permitted plan that it has been erected without planning permission and is in breach of planning control.

"The railway carriage as installed is not the carriage shown on the application plan, nor has it been erected within or at the same overall height that is shown on the application plan."