Theory:

     When the bodies were taken down to be thrown to crows and vultures the people panicked. They saw before them the dead bodies of the king and the minister. The city was in confusion.
 
     All night they mourned and discussed the future of the kingdom. Some people suddenly thought of the guru and the disciple and caught up with them as they were preparing to leave town unnoticed. “We people need a king and a minister,” said someone. Others agreed. They begged the guru and them disciple to be their king and their minister. It didn’t take many arguments to persuade the disciple, but it took longer to persuade the guru. They finally agreed to rule the kingdom of the foolish king and the silly minister, on the condition that they could change all the old laws.

     From then on, night would again be night and day would again be day, and you could get nothing for a duddu. It became like any other place.
Explanation:
 
When the dead bodies were taken to be thrown to crows and vultures, the people became panicked to see the dead bodies of their king and his minister. The city was in confusion. As everyone knew that the guru and his disciple were carried out to be killed. Unfortunately, instead of the guru and his disciple, they found the dead bodies of their king and minister.
 
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The dead bodies were taken to throw to crows and vultures (only for reference)
 
Everyone in the kingdom was mourning and discussed the kingdom's destiny. Because the king and his minister were no longer alive, no one was left to look after the kingdom. Some people suddenly remembered the guru and the follower and brought them back as they were about to leave the town secretly. The kingdom's citizens felt they needed a ruler and a minister, so they asked the guru and his disciple to become the kingdom's new king and minister. The disciple agreed quickly, but it took longer to make the guru agree upon this.
 
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People were mourning because no one was there to take care of the kingdom

Finally, the guru agreed to become the kingdom's king, but only if everyone decided to work during the day and sleep at night. Also, unlike the previous system, the cost of things would vary rather than being one duddu for everything. Everything would be priced differently, just like other places. The guru eventually transformed the kingdom of fools into a normal kingdom.
 
Meanings of the difficult words:
 
S.No
Words
Meanings
1
VultureA large bird with almost no feathers on its head or neck, that eats the flesh of dead animals
2
PanicSudden uncontrollable fear or anxiety, often causing wildly unthinking behaviour
3
ConfusionLack of understanding; uncertainty
4
MournTo feel or express great sadness, especially because of someone's death
Reference:
National Council of Educational Research and Training (2006). Moments. In the Kingdom of Fools– A K Ramanujan (pp. 19-24). Published at the Publication Division by the Secretary, National Council of Educational Research and Training, Sri Aurobindo Marg, New Delhi.