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According to the Shiva Purana Nageshvara Jyotirlinga is in " Darukavana ", which is an ancient name of a forest in India. " Darukavana " finds mention in Indian epics, such as Kamyakavana, Dvaitavana, Dandakavana. This powerful Jyotirlinga symbolizes protection from all poisons. It is said that those who pray to the Nageshwar Linga become free of poison.

Shiva Purana recounts the story of a demon named Daaruka, who attacked Shiva's devotee Supriya and imprisoned him in his city of Darukavana, a city under the sea inhabited by seasnakes and demons. Supriya requested his co-prisoners to chant the name of Shiva and immediately thereafter the Lord Shiva appeared and defeated the demon and started residing there in the form of a Jyotirlinga. The demon had a wife named Daaruki who worshipped Mata Parvati. As a result of her penance and devotion, Mata Parvati enabled her to master the forest where she performed her devotions, and renamed the forest 'Darukavana' in her honour. Wherever Daaruki went the forest followed her. In order to save the demons of Darukavana from the punishment of the gods, Daaruka summoned up the power Parvati had given her. She then moved the entire forest into the sea where they continued their campaign against the hermits, kidnapping people and keeping them confined in their new prison under water, which was how that great Shiva devotee, Supriya, had reached there.

Supriya's advent caused a revolution. He set up a lingam and made the prisoners recite the mantra Om Nama Shivaya in honour of Shiva while he prayed to the lingam. The demon's attempt to kill Supriya failed as Shiva appeared and handed him a divine weapon to save himself. Daaruki and the demons were defeated.The lingam that Supriya had set up was called Nagesha; it is the tenth lingam. Shiva once again assumed the form of a Jyotirlinga with the name Nageshwar, while Goddess Parvati was called Nageshwari.

The actual location of the legendary forest of Darukavana is debated. "Darukavana" is derived from 'daruvana' (forest of deodar trees) which is believed to exist in Almora. Deodar (daru vriksha) is found abundantly only in the western Himalayas, not in peninsular India. Deodar trees have been associated with Lord Shiva in ancient Hindu texts. Hindu sages used to reside and perform meditation in deodar forests to propitiate Lord Shiva.

The written name of Darukavana could be misread as 'Dwarakavana' which would point to the Nageswara temple at Dwaraka. However no forest is in this part of Dwaraka that finds mention in any of the Indian epics. Legends of Krishna, mention Somanatha and the adjoining Prabhasa Tirtha, but not Nageswara or Darukavana in Dwaraka.
Darukavana might exist next to the Vindhya Mountains. It is south-southwest of the Vindhyas extending to the sea in the west.

Lord Shiva Temple is in an underground sanctum. A 25 m tall statue of a sitting Lord Shiva and a large garden with a pond are major attractions of this rather serene place. Some archaeological excavations claim five earlier cities at the site.

A famous legends about this mystical temple:

'Balakhilyas', a group of dwarf sages worshipped Lord Shiva in Darukavana for a long time. For testing their devotion and patience, Shiva appeared as a nude ascetic wearing only nagas on his body. Wives of sages got attracted to the saint and went after him, leaving their husbands behind. Sages were outraged and distraught. They lost their patience and cursed the ascetic to loose his linga . Shiva linga fell on the earth and the whole world trembled. Lord Brahma and Lord Vishnu came to Lord Shiva, requesting him to save the earth from destruction and take back his linga. Shiva consoled them and took back his linga. Lord Shiva promised his divine presence in Darukavana as 'Jyothirlinga' for ever.

Two other sites in India, one near Audhgram near Purna in Andhra Pradesh and another near Almora in Uttar Pradesh also enshrine temples to Nageswara Jyotirlingam.
Lord Krishna Himself used to worship it and perform Rudrabhishekam. The Rudra Samhita sloka refers to Nageshwar with the phrase 'Daarukaavane Naagesham'.
Dvaraka is one of the Sapta-puris or seven holy towns – Ayodhya, Mathura, Haridwar, Kasi, Ujjin, Kancipuram and Dvaraka – and one of the four Dhamas or holy places – Rameswaram, Puri, Badrinath and Dvaraka.

One more legend. The Pandavas came here during their Vanavas to build a hermitage for themselves. Their cows used to go to the same river bank to drink water. After drinking water, milk used to flow automatically into the river as if the cows were offering to the river. One day Bhima saw this miraculous event and told Dharmaraja about the same. Then Dharmaraja said, "Surely, some great God must be living in this river". Then the Pandavas started removing the water from the river. The middle part of the river was so hot that the water there was boiling. Bheema lifted his mace and hit the river thrice. The water gave way instantly. Lord Shankara's Linga could be seen as the Jyotirlinga.

The Sivalinga is facing South, with the Gomukham facing East. There is a story for this position. A devotee by name Naamdev was singing bhajans in front of the Lord. Other devotees asked him to stand aside and not hide the Lord. To this Naamdev asked them to suggest one direction in which the Lord does not exist, so that he can stand there. The enraged devotees carried him and left him on the south side. To their astonishment, they found that the Linga was now facing South with the Gomukham facing East.

Another speciality of this Shivalinga is that unlike the other Shivalingas, which are made of black stone and look like a neat pillar rounded off at the top, this one is made of a stone known popularly as Dwarka Shila, which has small chakras on it. The shape of the linga is more or less like a oval 3 mukhi Rudraksha.

Aurangazeb, the notorious Mughal Emperor, wanted to destroy this Hindu temple. When he tried, thousands of bees came out of the temple and attacked him and his army. He left the demolition work midway and went back. The devotees rebuilt the broken temple.
Nageshvara Jyotirlinga .It was a very small shrine and was built to its present form by the Late Gulshan Kumar and his trust.
Two other sites in India, one near Audhgram near Purna in Andhra Pradesh and another near Almora in Uttar Pradesh also enshrine temples to Nageswara Jyotirlingam.