§ 776. Judgment. The court shall render a final judgment either

a. Dismissing the petition for failure to affirmatively establish the
allegations thereof or because of the affirmative establishment by the
owner or a mortgagee or lienor of record of a defense or defenses
specified in section seven hundred seventy-five of this article; or

b. Directing that (1) the rents due on the date of the entry of such
judgment from the petitioning tenants and the rents due on the dates of
service of the judgment on all other residential and non-residential
tenants occupying such dwelling from such other tenants, shall be
deposited with the administrator appointed by the court, pursuant to
section seven hundred seventy-eight of this article; (2) any rents to
become due in the future from all tenants occupying such dwelling shall
be deposited with such administrator as they fall due; (3) such
deposited rents shall be used, subject to the court's direction, to the
extent necessary to remedy the condition or conditions alleged in the
petition and (4) upon the completion of such work in accordance with
such judgment, any remaining surplus shall be turned over to the owner,
together with a complete accounting of the rents deposited and the costs
incurred; and granting such other and further relief as to the court may
seem just and proper. A certified copy of such judgment shall be served
personally upon each non-petitioning tenant occupying such dwelling and
upon the city of New York by service as provided in subdivision five of
section seven hundred seventy-one of this article. If personal service
on any such non-petitioning tenant cannot be made with due diligence,
service on such tenant shall be made by affixing a certified copy of
such judgment on the entrance door of such tenant's apartment, store or
other unit and, in addition, within one day after such affixing, by
sending a certified copy thereof by registered mail, return receipt
requested, to such tenant. Any right of the owner of such dwelling to
collect such rent moneys from any petitioning tenant of such dwelling on
or after the date of entry of such judgment, and from any
non-petitioning tenant of such dwelling on or after the date of service
of such judgment on such non-petitioning tenant as herein provided,
shall be void and unenforceable to the extent that such petitioning or
non-petitioning tenant, as the case may be, has deposited such moneys
with the administrator in accordance with the terms of such judgment,
regardless of whether such right of the owner arises from a lease,
contract, agreement or understanding heretofore or hereafter made or
entered into or arises as a matter of law from the relationship of the
parties or otherwise. It shall be a valid defense in any action or
proceeding against any such tenant to recover possession of real
property for the non-payment of rent or for use or occupation to prove
that the rent alleged to be unpaid was deposited with the administrator
in accordance with the terms of a judgment entered under this section.