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There is a story regarding the name Palani. 

          Lord Siva and Goddess Parvathi are seated atop Mount Kailas. One day, Lord Narada comes and gifts them a celestial fruit. The two sons of Lord Siva, namely Ganapathy and Murugan, demand the entire fruit for each of them. Siva announces a competition and promises to give the fruit to the one who wins the test. The  condition is they should go round the world and reach back first. Both agree to it and Ganapathy makes a circumambulation  of His parents, reaches first, and wins the fruit. Murugan who goes on his peacock around the world reaches later and finds that Ganapathy has won the prize. He therefore gets disappointed and, renouncing  the world, stands atop the Palani Hill. Siva and Parvathi come to Palani and pacifies Murugan telling him “Muruga, you are  yourself a divine fruit ;  then why do you need a fruit?  Fruit, in Tamil, is called “Pazham”. Hence this place came to be called as ‘Palani’, as Muruga was addressed as “Palam Nee”.  Some say that Palani got its name from “Pazhanam” (meaning paddy fields )