Dr. Monzer Kahf, a prominent Muslim economist and counselor, states: “Let us take two scenarios:
1. Goods came under one’s possession by means of good reason, such as purchase, gift or inheritance, but one came to know that these goods were unlawful in the hands of seller, donor or deceased. In this case, one would not be deemed as committing unlawful acts in getting them but one would be committing a sin if one opted to keep them after knowing their true owner. Once one knows the right owner, one is obligated in Shari`ah to return them unfortunately for free, i.e., without claiming the price paid for purchase. Then one has full right to sue the seller and claim the price paid.
If it happens that the owner (or his heirs) is (are) unknown, one MUST give the goods themselves to Islamic charity and one must not allow them to intermingle with one’s own property or make any use of them. One needs to make Tawbah (repentance) if one makes any undue delay in disposing of the goods as mentioned.
2. Goods came under one’s possession by unlawful means from one’s part. Certainly one MUST begin with repentance. Part of the repentance is to return the goods to their owner, his heirs or give them to charity as mentioned in scenario 1. One must also compensate the owner for any damage or loss or use for the period goods are in the possession of the wrongdoer.
In both cases, there is no room for burning or destroying useable goods; if goods are perishable, one must sell them and dispose of money as mentioned above. It should not be given to charity if owner or his heirs are known or can be known within a reasonable time frame. Always one should keep seeking Allah’s forgiveness and increasing one’s good deed and actions, for Allah the Almighty says in the Qur’an, “Indeed, good actions remove those that are evil.” (Hud: 114) The Prophet (peace and blessings be upon him) is reported to have said: “… and follow a bad action with a good action, it wipes it out.”“