Answer
The question is whether Lord Shiva's position as a controller within the universe can be occupied by someone else. The answer is no.
Lord Shiva is not a jiva. Therefore, the position of Shiva cannot be occupied by anyone other than Shiva Himself. It is a unique position meant exclusively for him. In that sense, Shiva is the permanent occupant of that role, performing the specific functions assigned to him within the cosmic arrangement. No ordinary living entity can replace him.
The next part of the question is: If Lord Shiva's position is higher than that of the jivas and belongs to a separate category of existence, how is it that Arjuna once defeated Lord Shiva in battle?
It is true that Shiva's position is higher than that of the ordinary jivas. Shiva belongs to a unique category known as Shiva-tattva. He is neither an ordinary living being nor exactly the same as Vishnu-tattva. His position is unique and distinct.
Lord Shiva alone occupies this position, and he does so eternally.
Now, regarding Arjuna defeating Shiva, this was one of the Lord's divine pastimes. Such events should not be understood in ordinary material terms. Lord Shiva does not perform activities that are subject to the laws of material nature in the same way that conditioned souls do.
The extraordinary nature of Shiva can be understood through many examples.
When the demigods and demons churned the Milk Ocean in search of nectar, the first thing that emerged was a deadly poison. The poison was so powerful that neither the demigods nor the demons could tolerate it. Not knowing what to do, they approached Lord Shiva for help.
Out of compassion, Shiva agreed to save them. He gathered the entire poison and reduced it to a small quantity in the palm of his hand. Then he swallowed it, but held it in his throat without allowing it to pass into his stomach. Because of this, his throat turned blue, and he became known as Nilakantha, "the blue-throated one."
Such activities are extraordinary and beyond the capacity of any ordinary being.
Similarly, at the end of the universe, Lord Shiva plays a principal role in the destruction of the cosmic manifestation. Neither Brahma, Indra, nor any other demigod can perform this function. It belongs uniquely to Shiva.
Thus, Shiva's activities are extraordinary, his position is unique, and his role is irreplaceable.
As for the pastime in which Arjuna defeated Shiva, it occurred when Lord Shiva, disguised as a hunter, tested Arjuna's devotion, determination, and martial skill. During that encounter, Arjuna fought valiantly and pleased Lord Shiva with his courage and expertise.
Being satisfied with Arjuna, Shiva blessed him and awarded him the Pasupata-astra, his personal and extremely powerful celestial weapon.
Lord Shiva knew that Arjuna would eventually have to fight mighty warriors in the Battle of Kurukshetra. Therefore, as an act of mercy and blessing, he granted Arjuna this divine weapon.
The purpose of the pastime was not to establish that Arjuna was superior to Shiva. Rather, it demonstrated Arjuna's extraordinary devotion, determination, and qualification, which pleased Lord Shiva and earned his special favor.
Thus, Lord Shiva remains uniquely situated in his own exalted position, while the pastime with Arjuna illustrates his affection for great devotees and his willingness to bless them when they exhibit exceptional devotion and sincerity.
