Legend has it that a cow used to drip her milk on a stone in a forest where the present Mandi town is located. The fact was verified by the then ruler Ajber Sen. In the meantime Lord Shiva appeared in the dream and ordained Ajber Sen to dig beneath the stone. He did it and to his pleasant surprise a large Shivlinga was found. He built Bhutnath temple on that spot in 1926. Simultaneously the capital of Mandi State was shifted from Bhiuli to this place where the town is located at present. First Shivratri Fair was held at that time and is continuing since then.