Carbon monoxide levels at a Tooting shisha bar were so high the council had to call emergency engineers to turn off the building's gas supply.
The potentially lethal conditions were found at Café Havana in Upper Tooting Road during a safety check, Lavender Hill Magistrates Court was told.
Environmental health officers found that charcoal burners were being used to produce the embers used in shisha pipes, and they were filling the café with poisonous fumes, putting customers and staff at risk.
Shisha tobacco smoking in an enclosed space has been illegal since 2006, along with other kinds of smoking.
A "hostile" clientele tried to prevent the officers from collecting evidence, but when they checked the carbon monoxide levels they had to call an emergency gas board engineer to cut off the café's gas supply to prevent levels increasing further.
The company behind Café Havana, Dragonstar Limited, and its director Imran Ali of Mile End Road, Whitechapel, were prosecuted for breaching the Health Act 2006.
Neither appeared at court, and were convicted in their absence. Each was fined £1,250 and ordered to pay £775 in costs and victim surcharge - a total of £4,050.
Wandsworth Council's consumer protection spokesman Councillor Steffi Sutters said: "There's a misconception that shisha is not as bad for you as cigarettes, because the tobacco is flavoured and passes through water first. But the carcinogens and nicotine are still there.
"The people who were visiting Café Havana to smoke shisha, and of course the staff working there, were taking enormous risks with their health. As if the threat from the tobacco was not enough, the build-up of carbon monoxide gas inside the premises could have been lethal.
"We would strongly advise people who wish to smoke hookah pipes in this way to switch to vaping methods instead. This is for their own health and the health of those living in close proximity."
Photo credit: Wandsworth Council