Quick answer: defend the merchant and kill the three elves for 50 crowns and 25 XP, or step aside and let the elves kill him, with no reward. The game never reveals whether he really sold the poisoned fisstech, so the choice is a purely moral one.
Overview
Karmic Justice is an unmarked secondary quest in The Witcher 3: Wild Hunt, set in the Farcorners district of Novigrad, in the alley just north of the dye pits. In the current version of the game it appears at night, roughly between 10 pm and 1 am. Talk to the group quickly, or the elves carry out their threat before Geralt can say a word.
Accusation
Three elves surround a human merchant. They say he sold poisoned fisstech to their young, who died in agony, and they have come for revenge. The merchant insists they are just robbing him. Geralt can suggest searching him, but the elves say there is nothing to find because he has already sold everything.
That is as far as the investigation goes. There is no proof either way, and the quest deliberately leaves the truth open.
The choice
Geralt can defend the merchant and kill the elves. Keep the merchant alive during the fight if you want the small reward he offers. Or Geralt can step aside and let the elves kill him, in which case they simply thank him for letting justice be done.
Quest not appearing?
Karmic Justice is unmarked, so it does not show on the map before you stumble on it. Go to the alley north of the dye pits in Farcorners at night, between about 10 pm and 1 am, meditating until then if needed. If you arrive late or hang back, the elves may already have dealt with the merchant.
FAQ
Is the merchant guilty? The game never says. The elves have no proof, the merchant denies everything, and searching him turns up nothing because he has supposedly sold his stock.
Should I help the merchant or the elves? Saving the merchant is the only option with a reward (50 crowns and 25 XP). Letting the elves have their revenge gives nothing but their thanks.
Where does Karmic Justice start? In Farcorners, Novigrad, in the alley just north of the dye pits, at night.
