In Shiva mahapuranam , Koti Rudra Samhita chapter, it tells how BheemaShankar Jyothirlinga came into existence.
Bheema Shankar Son of Kumbhakarna heads to take revenge
Bheema, the demon, was the son of Kumbhakarna and Karkati. After Kumbhakarna was killed by Sri Ram. Karkati and Bheema went to live at Sahya mountain. When Bheema grew up he asked Karkati about his father. Karkati told him that his father had been killed by Ram. Bheema swore to avenge his father’s death. He did a tremendous penance to please lord Brahma. Brahma appeared before him and blessed him with insurmountable power and strength.
Bheema Shankar torment Deities
Bheema then drove out the deities from heaven. He went to Kamarupa and defeated the king. He captured the king and put him in prison. The helpless king used to pass his time by chanting the mantra Om Namah Shivay. His wife worshiped the Pavithra linga of Shiva for the release of the king.
All the deities went at the bank of river Mahakeshi and worshiped the Pavithra linga of lord Shiva. Lord Shiva appeared before them and assured them that the end of Bheema was near.
Lord Shiva went to the king who had been held captive by Bheema. His ganas too accompanied him.
Lord Shiva Appears to Kill Bheema
All of them waited for the opportune time to kill Bheema. Meanwhile somebody informed Bheema that the king was doing worship of Shiva in the prison, with the objective of getting Bheema killed. Bheema arrived at the spot in the prison where the king was worshipping the Parthiva linga of Lord Shiva. He made fun of Shiva and struck the Shiva linga with his sword. Right then, Lord Shiva appeared. A tremendous battle was fought between both of them. The battle continued for a long period. Sage Narad requested lord Shiva to kill Bheema as soon as it was possible.
Establishment of Bheema Shankar Jyothirlinga
Lord Shiva produced fire by his loud roar. In a very short time the fire spread in the whole forest. All the demons including Bheema were burnt to death. The deities and the sages arrived there. They requested Lord Shiva to remain there. Lord Shiva accepted their request and established himself in the form of Bheema Shankar Jyotirlinga (Present Location Nigdale, Maharashtra ).