In the last months of the prophet's life, Gabriel descended to the prophet conveying a message from Allah: "There remain two obligations that you must convey to your people: the obligation of Hajj, and the obligation of Wilayah (the guardianship and succession) after you. For indeed, I have never left My earth without a proof, and I will never leave it without one." The Prophet had often spoken about Imam Ali's unique rank, but hadn't formalized his succession in front of a large audience.
Prophet Muhammad ordred all who could to join him in his Hajj, about 70-124,000 people joined, and sent a message to Imam Ali, who was still in Yemen, to also join with his men.
When nearing Mecca, Imam Ali rushed ahead to meet the Prophet, leaving Abu Rafi al-Qibti in charge of the men. When Imam Ali returned he saw that for their Ihram those men had put on the fine Yemeni fabrics, a khums collected from Yemen. Imam Ali reprimanded them and ordered them removed and repacked immediately. While this was the just course of action, this disciplining would natrually lead to tension being created between him and his troops.
After the they all returned to Mecca, Imam Ali was praying in the sacred mosquen when a begger entered and asked for charity. Without interrupting his prayer, from ruku Imam Ali extendeded his hand and offered his ring to the beggar. At this moment some companions were with the prophet as the verse was revealed "Your guardian is only Allah, his Prophet, and the faithful who maintain the prayer and give charity while bowing down."
During hajj, the prophet often emphasized the two weightly things he was leaving behind: the Quran and the Ahlul Bayt. During this time Allah repeatedly instructed the prophet to make his succession announcement, but concerns about the potential backlash from some companions kept Prophet Muhammad from doing so until Allah sent a promise of protection.
The Prophet's concern about backlash from his companions foreshadowed the opposition Imam Ali would later encounter.
Lecture notes available at http://www.why-quran.org/?p=762.
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