A D.C. Superior Court judge yesterday refused to return to prison immediately a Hanafi Muslim he freed several years after the man was convicted in the 1977 takeover of three buildings in Washington and the holding of 149 hostages.

In a loud and at times exasperated voice, Judge Nicholas S. Nunzio told federal prosecutors that at this time he is denying their request that Hilvan Finch, known in 1977 as Abdul Hamid, be returned to prison to continue serving a minimum 36-year sentence.

"I'm letting him out," Nunzio told Assistant U.S. Attorney Paul Knight. "He's been out for four and a half years," Nunzio said.

Finch has been the center of an intense legal battle between prosecutors and Nunzio since the judge freed him in 1981. It was a startling decision, and federal prosecutors eventually persuaded the D.C. Court of Appeals to order Finch back to prison.

Nunzio has refused to follow that order and has attempted to find a compelling legal argument to keep Finch free. Nunzio, in freeing Finch, said Finch "demonstrates great potential for doing much good in this world" and, in fact, had secretly aided a number of the hostages during the three-day siege at the risk of his safety.

At yesterday's hearing, Nunzio said Finch will remain free until Nunzio reaches a decision in the case. Nunzio noted that Finch has always returned to court voluntarily for hearings in the case.

"Where is he going to go?" Nunzio asked at the end of a three-hour hearing during which Finch sat stolidly between his lawyers. "Some people have said to me, 'Why doesn't he run?' Maybe he has faith in the system . . . . Even if he does get locked up, he has 30 more days before he begins serving" more than 30 years in prison.

At yesterday's hearing, Finch's lawyers, Timothy Junkin and Greta Van Susteren, once again asked Nunzio to reduce their client's sentence, arguing that Finch's sentence was unconstitutional because Finch did not testify at his trial or his sentencing because he feared for his life and the lives of his family, his lawyer and his lawyer's family. Finch, they argued, was a "virtual prisoner" during the takeover.

Charles F. Stow III, Finch's defense attorney at the time of the trial and sentencing, testified yesterday that Finch was "so scared" of other Hanafis that he hardly allowed Stow to present evidence that could have altered his sentence.

When Nunzio asked Stow why the lawyer had not spoken of Finch's fears during the trial, Stow replied, "I was limited by what might have happened to Hilvan Finch . . . . It was not because I didn't want to do better, but if I did do what I should have done . . . Hilvan Finch wouldn't be here today."

Knight said Finch had been a willing participant in the takeover and that it was Finch's fault for not presenting other information at the time of his sentencing.

"No one asked Mr. Finch to point a gun at those individuals," Knight said.