Ibn 'Abbās 
narrated:
When the Harūriyyah (the Khawārij) rebelled, they isolated themselves in a place. There were 6000 of them and they were united in rebelling against 'Alī. Continuously people would come to 'Alī and say, "Oh Leader of the Believers, verily these people are rebelling against you." He would reply, "Leave them, verily I will not fight them until they fight me and that is what they will do."
So when it came to that day, I came to 'Alī before the noon prayer and I said to him, "Oh Leader of the Believers, delay the prayer until it is cooler perhaps I will speak to these people." He said: "Verily, I fear for you." I said, "Never! I used to be known as a man of good manners, I never harmed anyone." He gave me permission to go. So, I put on a very nice garment, the best of what one could get from Yemen and I combed my hair. Then, I visited them at midday while they were eating.
I had entered upon a people, the likes of whom I had never seen with regards to their exertion in worship Their foreheads were wounded due to (constant) prostration (in prayer) and their hands had become rough like camels' feet, wearing recently washed, untidy shirts with very high raised clothing and with tired and worn out faces [due to not caring for themselves].
So, I greeted them and they said, "Welcome, oh son of Abbās! And what is this cloak you are wearing?" I asked, "What deficiency do you see from me? Indeed, I saw the messenger of Allāh (ﷺ) dressed in the best of what you can find in Yemeni clothing, then I recited this verse:
قُلْ مَنْ حَرَّمَ زِينَةَ ٱللَّهِ ٱلَّتِىٓ أَخْرَجَ لِعِبَادِهِۦ وَٱلطَّيِّبَٰتِ مِنَ ٱلرِّزْقِ
Say, "Who has forbidden the adornment of Allāh which He has produced for His servants and the good [lawful] things of provision?"
Surah al-A'raaf 7:32
Then they asked, "What has brought you here?" I told them, "I have come to you from amongst the companions of the Prophet (ﷺ), the Muhājirūn and the Anṣār and from the son of the uncle of the prophet (ﷺ), 'Alī, who is his son-in-law. And upon them descended the Qurʾān; they are more knowledgeable about it than you and there is not one of them (the companions) amongst you. I have come to convey to you what they say, and to convey to them what you say."
A group amongst them said, "Do not debate with the Quraysh because verily Allāh says: بَلْ هُمْ قَوْمٌ خَصِمُونَ
Then a group of them turned towards me and two or three of them said: "Verily, we will speak to him." So I said, "Come forward, what is the grudge you have against the companions of Allāh’s messenger and the son of his uncle ('Alī)?" They answered, "Three points." I asked, "And what are they?" They said,
"One of the points is that he ('Alī) had men judge in a matter of Allāh while Allāh says: إِنِ ٱلْحُكْمُ إِلَّا لِلَّهِ
I said, 'This is one point.' They said, 'As for the second point, then he fought and he did not take captives nor did he take the war booty. If they were disbelievers, then their captives are permissible for us and if they were believers then their captives are neither permissible to take nor was it allowed to fight them (in the first place).'
I said, 'This is the second point, and what is the third point?' Or he said something similar. They said, 'He should remove the title of 'Leader of the Believers' (Amīr al-Mu’minīn) and if he is not the 'Leader of the Believers' then he is the 'Leader of the Disbelievers' (Amīr al-Kāfirīn).'
I asked, 'Do you have any points other than these?' They replied, 'These are sufficient for us.'
I said to them, 'Do you understand that if I read to you from the book of Allāh and from the Sunnah of His prophet that which refutes what you say, will you then return (back)?' They said, 'Yes.'
I said: 'As for your statement that 'Alī had men judge in a matter that was for Allāh; then I will read to you from the book of Allāh, where Allāh has delegated His judgment to men regarding the eighth of a quarter of a dirham. Allāh commanded the people to judge in this matter. Do you not understand the saying of Allāh:
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوا۟ لَا تَقْتُلُوا۟ ٱلصَّيْدَ وَأَنتُمْ حُرُمٌ ۚ وَمَن قَتَلَهُۥ مِنكُم مُّتَعَمِّدًا فَجَزَآءٌ مِّثْلُ مَا قَتَلَ مِنَ ٱلنَّعَمِ يَحْكُمُ بِهِۦ ذَوَا عَدْلٍ مِّنكُمْ
O you who have believed, do not kill game while you are in the state of ihram. And whoever of you kills it intentionally - the penalty is an equivalent from sacrificial animals to what he killed, as judged by two just men among you
Surah al-Ma'idah 5:95
And it is from the judgment of Allāh that He delegated men to judge in this matter. If Allāh willed, He could have judged in this matter but He allowed men to judge. I ask you by Allāh, is it better that men judge in something regarding reconciliation in disputes and in preventing bloodshed or regarding the hunting of a rabbit?' They said, 'Of course, this is better.' 'And regarding a woman and her husband (Allāh says):
وَإِنْ خِفْتُمْ شِقَاقَ بَيْنِهِمَا فَابْعَثُواْ حَكَمًا مِّنْ أَهْلِهِ وَحَكَمًا مِّنْ أَهْلِهَا
And if you fear dissension between the two, send an arbitrator from his people and an arbitrator from her people. If they both desire reconciliation, Allāh will cause it between them. Indeed, Allāh is ever Knowing and Acquainted [with all things].
Surah an-Nisaa 4:35
'Is not men judging in reconciling disputes and in the prevention of bloodshed better than men judging regarding the private parts of a woman? Have we finished with this point?' They replied, 'Yes.'
I said, 'As for your statement, 'He fought but did not take captives and did not take war booty,' then would you take your mother (in Islam), Ā’ishah, as a captive, making her permissible for yourselves for that which you make permissible from other than her while she is your mother? If you say, 'We make permissible from her that which we make permissible from other than her,' then you have committed disbelief. And if you say, 'She is not our mother,' then you have also committed disbelief:
النَّبِيُّ أَوْلَى بِالْمُؤْمِنِيَنَ مِنْ أَنفُسِهِمْ وَأَزْوَاجُهُ أُمَّهَاتُهُمْ
The Prophet is more worthy of the believers than themselves, and his wives are [in the position of] their mothers Surah al-Ahzaab 33:6
'And so you are between the two ill judgments. So, which of them do you want to take? Have we finished with this point?' They said, 'Yes.'
As for 'Alī removing the title of 'Leader of Believers,' then I will give you something that will please you; verily, the Prophet of Allāh contracted an agreement with the Mushrikīn (the disbelievers of Quraysh) on the Day of Hudaybiyyah, and the Prophet said to 'Alī:
اُكْتُبْ يَا عَلِيّ هَذَا مَا صَالَحَ عَلَيْهِ مُحَمَّدٌ رَسُولُ اللَّهِ
Write, oh 'Alī: This is what Muḥammad, the messenger of Allāh, agrees with.
They, the Mushrikīn, said, 'If we knew you to be the messenger of Allāh, we would not have fought you.' So the Messenger of Allāh said:
اللَّهُمَّ تَعْلَمُ أَنِّي رَسُولُكَ اِمْحَ يَا عَلِيّ وَاكْتُبْ هَذَا مَا اصْطَلَحَ عَلَيْهِ مُحَمَّدٌ بْنُ عَبْد اهلل
Oh Allāh, indeed You know that I am Your messenger. Erase it, 'Alī, and write: This is what Muḥammad Ibn 'Abd Allāh agrees upon.'
(The story of Sulah al-Hudaibiyyah is also recorded in Sahih Muslim 5)
I swear by Allāh that the messenger of Allāh is better than 'Alī and even he erased his own name, and erasing his name does not erase his prophet-hood. Have we finished with this point?
They said, "Yes." So 2000 of them came back while the rest of them rebelled and fought, based upon their misguidance, and the Muhājirūn and Anṣār fought them.
The Reference for this Narration
- ‘Abd al-Razzāq in his book: al-Muṣṣannaf (18678)
- Aḥmad (1/243)
- al-Hākim (2/150- 152)
- Ibn Abd al-Barr in his Jām’' Bayān ‘Ulūm (2/962-964/ 1834) and others.
This story has many other narrations in al-Kabīr and some of them were authenticated by al-Ḥaythamī.