Fiqh-us-Sunnah Volume 4, Funerals and Dhikr, Fiqh 4.077.
Muslim scholars agree that a place where a Muslim is buried should not be disturbed if flesh, bones, or other parts of the body remain there. If any of his other remains are found it is not permissible to disturb them. But if the entire corpse has disintegrated into dust, then a new grave may be dug there. Also, in such a case it is permissible to use the land for planting, cultivation, building, and for other beneficial purposes. If the remains of a body, such as bones, are found during the digging, then the digging should be stopped. And if the remains are found after the digging is finished, then it is quite permissible to place these to one side in the grave and bury another body beside them.
If the deceased person was buried before a funeral prayer was offered for him or her and the person had not yet been covered with soil, then the remains should be removed and the funeral prayer should be offered before reburial. But if the deceased was buried completely without a funeral prayer, it is unlawful, according to the Hanafi and the Shafi’i schools, to dig up the grave. This is also the opinion of Ahmad, according to one narration from him. In such a case, a funeral prayer should be offered for the deceased without disturbing the grave. Yet another report from Ahmad says that in such a case the grave should be dug up, the body exhumed, and a funeral prayer offered for the deceased person.
The leaders of the three schools hold it permissible to dig up a grave for a valid reason, e.g., to remove some money left in the grave, to turn the face of a body toward the Kaibah if buried otherwise, to wash a body that was buried without a proper purification, and to improve the shroud. This is not done, however, in cases when it is feared that by doing so the corpse will disintegrate.
The Hanafi school disagrees and considers it not permissible to dig up a grave for any of the above reasons. They consider such digging of a grave as a sort of dismembering of the body, which is not permissible in any case. Ibn Qudamah countered this position by explaining: “It would be considered dismemberment (muthlah) only in the case of those whose bodies have rotten away. In such a case, a grave should not be dug up. If the deceased was buried without a shroud, then there are two alternatives. First, he should be left alone since the object of having a shroud is to cover the body. and that is achieved by covering it with soil. Second, the grave should be dug up and the body shrouded, because shrouding is obligatory and is as important as washing the body.”
Ahmad said: “If the grave digger forgot and left his tools inside the grave, he may dig them up.” The same applies if someone dropped an axe, some money, or something of value. He was asked: “What if the deceased’s family offered the owner of the objects compensation for his lost valuables? “He said: “If they give him his rightful due, then he may not dig.”
Bukhari has reported a relevant hadith concerning this from Jabir, who said: “The Prophet, peace be upon him, came to Abdallah ibn Ubayy after he was lowered in his grave. He commanded his companions to take him out. Then he put him on his knees, blew his saliva over him, then put a shirt on him.” He has also reported: “A man was buried with my father. I did not feel good until I removed him and buried him in a separate grave.” (The body was taken out six months after his father’s death)
Bukhari has given these two hadith in a separate chapter, entitled: “Can a deceased be taken out of the grave for any reason?” Abu Daw’ud reported from Abdallah ibn ‘Amr who said, “While we were going to al-Taif and passing by a grave, I heard the Prophet, peace be upon him, saying: ‘This is Abu Raghal’s grave.’ He used to treat the Prophet insolently in the sacred precincts (of the Sacred Mosque). The Prophet, peace be upon him, added, ‘When he left, a retribution overtook Abu Raghal, as it did his people at this place, so he was buried here. And the proof of this is that he was buried with a piece of gold. So if you dig up his grave, you will get it.’ The People rushed to the grave, dug it up, found, and removed the gold piece.”
Al-Khattabi said: “This shows that it is permissible to dig up the graves of polytheists if there is some good or benefit for Muslims in doing so. Indeed, in such a situation their case is not similar to that of deceased Muslims.”