The word Milad has been derived from "viladut" which means birth. Therefore, according to Arabic language, Milad is word which signifies the place and time of birth. In the light of Shariah, we means, Milad is to remember the events which took place at the birth time of the Holy Prophet (Allah's Grace & Peace be upon Him) and we get the opportunity of narrating the Seerat of the Prophet (Allah's Grace & Peace be upon Him) on this occasion, we also presents the Holy Prophet (Allah's Grace & Peace be upon Him) gifts of Durood -o- salam. We mention before the people attributes and praises of the Prophet (Allah's Grace & Peace be upon Him). We do not believe that Milad is specified with same night but, we believe that the remembrance of the Holy Prophet (Allah's Grace & Peace be upon Him) is incumbent in each minute and second of time and every Muslim should act it sunnahs in the whole life time. Milad un Nabi (Allah's Grace & Peace be upon Him) is a great source of preaching. It is incumbent for scholars to teach Muslims nations on this Holy occasion, moral behavior of the Holy Prophet, (Allah's Grace & Peace be upon Him) his antiquates, His affairs, His Seerat, His dealings and His worships.
According To Quran :
1) Allah Almighty says in Quran:
"The peace is on Him the day when he was born and the day when he will die and the day when he will be raised alive." (Kanzul Iman the translation of Holy Quran, Sura Al-Maryam, Verse 15)
2) Allah Almighty says:
"And remind them of the days of the Allah."
(Kanzul Iman the translation of Holy Quran, Sura Ibrahim, Verse5)
3) Allah Almighty orders us:
"Say you oly Allah's grace and his mercy, on it therefore let them rejoice. That is better then all their wealth." - In this verse Allah Almighty orders us to enjoy on his grace and mercy. If we see around us we find that each favor of Allah Almighty is great mercy for us. Even our existence is also a mercy of Allah Almighty. But the greatest of Allah is the Holy Prophet (Allah's Grace and Peace be upon him).
"And we sent not you but mercy for all worlds."
(Kanzul Iman the translation of Holy Quran, Sura Al Ambiyaa, Verse 107)
4) The gathering of Milad un Nabi (Allah's Grace and Peace be upon him) incite Muslims on saying Durood and Salam ( to pray for prophet (Allah's Grace and Peace be upon him) of blessing and peace) Allah Almighty says:
"Oh you who I believe send upon Him blessing and salute Him fully well in abundance. (Kanzul Iman the translation of Holy Quran, Sura Al Ahzab, Verse 56)
According To Hadith :
There are many other narrations which narrate that the Prophet of Allah (Allah's Grace and Peace be upon him) celebrate his own Milad several times, some of those narrations have been written in Mishkat Sharif.
1) "The one who rejoices on the birth day of the Holy Prophet would not be severely punished and it is hopped that a Muslim who celebrate the Milad un Nabi (Allah's Grace and Peace be upon him), will not be punished in hell. Imam Bukhari Rahmatullah Alaih narrates that Abu Lahab would be punished lightly in the hell on Monday. Because he rejoiced and freed his handmaid indicating by his finger, when the Prophet of Allah Almighty (Allah's Grace and Peace be upon him) took birth. So as a reward of happiness on Milad un Nabi (Allah's Grace and Peace be upon him) he would be given water by his finger. (Saheehul Bukhari Vol. 2, Page 764)
2) Imam Shams ud din Naseer Al Damaishqi narrates this hadith in poetry. Here is its translation.
If such kafir was denounced (in the Quran)
And perished are his hands, and in the flame is his eternal abode.
It is narrated every Monday.
His torment is made easy for his joy at the birth of Ahmad. (Allah's Grace and Peace be upon him)
What is the expectation then of a servant who spent all his life.
Happy with the arrival of Ahmad (Allah's Grace and Peace be upon him) and died on the one ness of Allah Almighty. (Haul-ul-Ahtifal Bil Mawlid Al-Nabvi Al Sharif, Page 11)
2) The Holy Prophet Muhammad (Allah's Grace and Peace be upon him) celebrated his own Milad by having fast. Imam Wali ud din write this narration with reference to the Saheeh Muslim. When the Prophet of Allah (Allah's Grace and Peace be upon him) was asked about the fast of Monday. He (Allah's Grace and Peace be upon him) said:
"I took birth and the Quran was revealed upon me in this day."
(Mishkat Sharif, Page 179)