The Pretoria high court has found the Blouberg municipality in Limpopo guilty of contempt of court after it failed to comply with two of its orders to rebuild shacks it demolished.
The court has for the third time ordered the municipality to rebuild them within 14 days or else councillors will be imprisoned or fined.
Justice Classen said all councillors, including the municipal manager, would be arrested and stood to be jailed for 60 days or alternatively fined R25000 each if they defied the order again.
The court also ordered the municipality to pay the legal cost - estimated to be R1million - incurred by residents in bringing the case to court.
Over and above that the residents have brought an action claiming R23million in damages.
The beleaguered municipality is still facing a pending damages claim estimated at about R198million resulting from the unlawful eviction of 500 families in 2002 in the same disputed area.
The municipality made another contentious move in December when it demolished 67 shacks.
Nearly 10000 residents live in Desmond Park near Senwabarwana, formerly known as Bochum.
The court said yesterday the municipality had acted irresponsibly by demolishing the shacks without first obtaining a court order to do so.
"We are giving the municipality a further 14 days to rebuild the shacks or else face the full might of the law," Classen said yesterday.
The order by the Pretoria high court comes barely two years after the municipality was sued for R23million for demolishing 500 shacks in the same area.
Disgruntled residents argued that the demolition was illegal and that the municipality went ahead and demolished the shacks without first consulting them.
They said the process had humiliated them and had violated their privacy.
Residents spokesman Wilson Hlako said they would not back down on their demands for their shacks to be rebuilt.
"When the municipality bulldozed our shacks, we were forced to sleep in the street with our children for nearly a month," he said.
The attorney representing the residents, Gilford Malatji, said he was confident that the residents had a genuine case and that they would win in court.
Contacted for comment yesterday, a spokesman for the municipality said it had not yet received a formal order from the court.
"Yes, we were ordered by the court to rebuild the shacks but we cannot do anything before we receive a formal order," the spokesman said.