In the chapter 31, Section 3 of Satarudra Samhita of Shiva Purana, the story of incarnation of Shiva as Bhikuuvarya is mentioned.
There was a king in the land of Vidarbha, named Satyaratha. He was virtuous, regularly observing truthfulness and a favourite of great devotees of Shiva. The king ruled over the kingdom virtuously observing piety to Shiva. Once, a great fight ensued between that king and the Salvas who laid siege to his city with many armies puffed up with their strength. The king of Vidarbha had a terrible fight with them. But his armies were destroyed and he was killed by Salvas due to adverse fate.
When the king was killed in the battle by the Salvas, the terrified soldiers who survived death fled along with the ministers. His crowned queen who was pregnant and who had been imprisoned by the enemies escaped from the city, during the night. Coming out of the city the grief-stricken crowned queen slowly went very far in the eastern direction with her heart set on the lotus-like feet of Shiva. Early in the morning next day after she had traversed a long way, the queen saw a pure lake, thanks to the mercy of Shiva. After reaching the banks of the lake the distressed beloved of the king, of tender body, resorted to a shady tree for rest and stay. Fortunately in an auspicious and meritorious hour the queen gave birth to a son endowed with all divine characteristics. The thirsty mother, the wife of the king, entered the lake for drinking water but as willed by fate she was devoured by a crocodile in the water.
The son bereft of father and mother, distressed by hunger and thirst at the time of birth, cried out. When the new born baby was weeping and wailing in the forest, Shiva, the immanent soul and protector, was moved to pity.
A wandering beggar woman came there accidentally, urged mentally by Shiva, the dispeller of fear. She was a widow and was herself carrying her one year old son. She saw an orphaned child weeping there. On seeing an infant boy in the desolate forest that Brahmin woman was surprised and pondered over the situation in diverse ways.
“An extremely wonderful thing has been seen by me now. It cannot be conceived by the mind or explained in words. This infant whose umbilical cord has not been cut lies on the bare ground. He has no mother. He is weeping but he is very brilliant. He has no parents or persons to help him. What might have caused this? Alas, how strong is power of fate. I do not know his parentage. There is none who knows him. Whom can I enquire about the details of his birth? But I feel drawn towards him. Without knowing his birth and parentage I shall not touch him, although I wish to nourish him and bring him up as a child born of me.”
While the excellent Brahmin lady was musing thus, Shiva favourably disposed to his devotees, took pity. Lord Śhiva, bestower of happiness on devotees in every respect, unconditionally for ever, by himself assumed the form of a mendicant. The mendicant who was lord Shiva himself suddenly came to the place where the doubting Brahmin lady, desirous of knowing the details, was standing. The lord whose ways are unscrutable, who is the storehouse of mercy and who assumed the form of the leading mendicant laughed and told the Brahmin lady. The mendicant said:--
“O Brahmin lady, do not entertain any doubt in your mind. Do not be sorry. Protect this pure boy, your adopted son, lovingly. Ere long you will attain a great glory through this infant. Nourish this extremely brilliant infant by all means.”
That Brahmin lady respectfully and lovingly asked Shiva, the storehouse of mercy, in the form of a mendicant who spoke thus. The Brahmin lady said:--
“At your behest I shall nourish and bring up this boy as though he is my own son. There shall be no; doubt in this. You have come here by my good fortune. Still I wish to know the particular details and facts about him. Whose son is he? Who are you that have come here? O lord, O excellent mendicant, again and again the thought occurs to me that you are Shiva, the ocean of mercy and this infant had been your devotee formerly. Through some defect in his past actions he has attained this plight. After experiencing it he will surely attain glory, thanks to your bliss. It is by your Maya that I have been deluded. I had lost my way. In order to protect him I have been urged by you to come over here.”
Shiva in the guise of a mendicant spoke to the Brahmin lady who had attained perfect knowledge by seeing him and who evinced the desire to know the details. The mendicant said:--
“O brahmin lady, listen with pleasure to the antecedents of this boy. O sinless one, I shall mention all the details to you. This boy is the son of Satyaratha, king of Vidarbha a great devotee of Shva and devoted to his duty. Listen, the king Satyaratha was killed by his enemies in the battle. His excited and distressed wife set out from the palace at night. She came here in the morning and gave birth to this boy. Due to thirst she got into the lake and as fate would have it, was seized by the crocodile.”
Thus he narrated to her all the details, the manner of his birth, the death of his father in the battle and that of his mother due to the crocodile. Then the Brahmin lady who was surprised asked the mendicant of perfect knowledge in the form of a Siddha, again. The Brahmin lady said: -
“O mendicant how was his father, the king, killed in the midst of his enjoyment of excellent pleasures, by his enemies the Salvas in a few days? How was the mother of this infant devoured by the crocodile so suddenly? How did he happen to be orphaned and helpless ever since his birth? How are it that my son too is very poor and a beggar? O mendicant, how will these two sons attain happiness? Please tell me.”
On hearing these words of the Brahmin wife, the delighted mendicant, lord Shiva himself, said laughingly. The mendicant said:--
“O brahmin lady, I shall answer all questions in detail. Listen with attention to this excellent narrative. The father of this boy, the king of Vidarbha, was the excellent king Paṇḍya in his previous birth. That king was a devotee of Shiva. He ruled over the entire earth virtuously. Quelling all disturbances he made all the subjects happy and contented. Observing fast and other rites in the day and night on a Trayodashi (thirteenth) day, once, he worshipped Shiva at dusk. As he was worshipping Shiva at dusk in the course of his holy rites there arose a great noise, in the city, hideous in every respect. On hearing that noise, the king left the worship of Shiva unfinished and went out of his palace suspecting the arrival of enemies. In the meantime, his powerful minister came near the king catching hold of the enemy king. On seeing the enemy king, he was extremely agitated by anger. Disregardful of the right course he caused him to be beheaded. Without concluding the worship of Shiva, the defiled king, confused in mind and bereft of auspiciousness, took his food at night with pleasure.
He was born as the king of Vidarbha. He observed holy rites of Shiva during this birth also since there was a hindrance to his worship of Shiva (during the previous birth) he was now killed in the midst of his enjoyment. His son in the previous birth was born as his son in this birth too but he was bereft of riches due to the break in the worship of Shiva. The mother of this boy had killed her co-wife in the previous birth. Hence due to that sin, she was devoured by the crocodile in this birth. Thus their activities have been narrated to you. People having no devotion to Shiva and not worshipping him attain poverty.
This son of yours was an excellent Brahmin in his previous birth. He spent his life in accepting gifts but he did not perform holy rites, like sacrifice etc. O Brahmin lady, hence your son has incurred poverty. Seek refuge in Shiva in order to ward off that sin. Let the worship of Shiva be performed by these two sons. Only after the investiture with the sacred thread will Shiva bestow glory.”
After instructing her thus, Shiva in the form of a mendicant, favourably disposed towards his devotees revealed his real self to her. On coming to know that he was lord Shiva the Brahmin lady bowed to and eulogised him with choking words full of devotion.
Even as the Brahmin lady stood watching, Shiva who had taken the form of a mendicant vanished there itself. When the mendicant disappeared, the care-free Brahmin woman took that boy and her son home. Their sacred rites and the investiture with the sacred thread were performed by the Brahmins. They grew up thus devoted to the worship of Shiva in their own house.
Once when the prince went to the river for his bath without the Brahmin boy, he found an excellent pot of treasure. Thus four months elapsed as the two boys continued their worship of Shiva. As they continued the worship of Shiva again with great joy, a year elapsed in the very same house. After a year had elapsed, the prince once went to a forest along with the Brahmin boy. There a Gandharva came by chance and gave his daughter in marriage to the prince. The prince ruled over the kingdom without any check or hindrance. He considered the Brahmin lady who brought him up as his mother and the Brahmin boy as his brother. In name of Dharmagupta he continued to propitiate the lord of gods and enjoyed pleasures along with the princess in the kingdom of Vidarbha. Thus the incarnation of Shiva as the Bhiksuvarya bestowing happiness on the prince Dharmagupta has been narrated.