Around 800 years ago, Dharmasthala, then known as Kuduma in Mallarmadi, Belthangady, was home to Jain chieftain Birmanna Pergade and his wife Ammu Ballalthi. They resided in a house named Nelliadi Beedu. According to local legend, guardian angels of Dharma, who had taken human form, visited Pergade’s home in search of a place where Dharma was practiced and could be furthered. The couple received these visitors with great hospitality. Impressed by their devotion, the Dharma Daivas appeared to Pergade in a dream that night, revealing their purpose and instructing him to vacate his house for the worship of the Daivas and dedicate his life to spreading Dharma.
Without hesitation, Pergade constructed a new home and began worshipping the Daivas at Nelliadi Beedu. The Dharma Daivas later appeared to him again, directing him to build separate shrines for four deities: Kalarahu, Kalarkayi, Kumaraswamy, and Kanyakumari. They also instructed Pergade to appoint two noble individuals as the Daivas’ oracles and four deserving people to assist him in managing the shrines. In return, the Daivas promised protection for Pergade’s family, prosperity, and fame for the ‘Kshetra’. Pergade built the shrines and invited Brahmin priests to perform the ceremonies. The priests requested the installation of a Shivalinga alongside the native Daivas. The Daivas then sent their vassal, Annappa Swamy, to obtain the Shiva linga from the Kadri Manjunath Temple near Mangalore, which led to the construction of the Manjunatha temple around the linga.