Al-Matalib al-'Aliyah 1873 — The punishment for theft

Abu Matar narrates: I saw Sayyiduna Ali (may Allah be pleased with him) when a man was brought to him, and the people said that he had stolen a camel. Sayyiduna Ali (may Allah be pleased with him), (seeking a way to spare him,) said to him, "I do not think you have stolen." He replied, "Yes indeed (I did)." He said again, "Perhaps it merely seemed so to you (and in reality it was not theft)?" He said, "No, I really did steal." He said, "O Qanbar! Take him away, bind his finger (tightly), light the fire and call the butcher so that he may cut (the hand); then wait until I come." When Sayyiduna Ali (may Allah be pleased with him) came, he asked him (again), "Did you steal?" He replied, "No." So he let him go. The people said, "O Commander of the Believers! Why did you let him go when he had confessed before you?" He said, "I took him on his own word (his confession), and now I have let him go on his own word (his denial)." Then Sayyiduna Ali (may Allah be pleased with him) said (explaining this approach): A thief was brought to the Messenger of Allah (peace and blessings be upon him), and he (peace and blessings be upon him) ordered his hand to be cut off and then wept. We said, "O Messenger of Allah! Why are you weeping?" He (peace and blessings be upon him) said, "How can I not weep when the limbs of my Ummah are being cut off before you?" The Companions said, "O Messenger of Allah! Did you not pardon him?" He (peace and blessings be upon him) said, "That is an evil ruler who pardons in the hadd punishments (after the case has been proven in court); rather, you should pardon one another in matters of the hadd punishments among yourselves (before the matter reaches the ruler)."
This blessed hadith establishes the great juristic principle that in matters of the hadd punishments the hadd is dropped on the basis of doubts, and that a punishment given solely on the basis of a confession lapses if the confession is retracted; it also encourages resolving criminal matters at the social level through mutual pardon and reconciliation before they reach the ruler.