Hi Parul,
If the user does not enter a search string before clicking the Lookup Search button, it doesn’t return all but just the 20 most recent items the user has clicked on. This is because this display will be a dynamic entry if we do so on the salesforce search engine, therefore it will make the display based on each organizations private settings. This will cause a delay on our servers because of so many individual queries. This means to ensure the top performance on speed and data retrieval we have decided to leave the default to the most recent ones. So in short, a full list of all records for an object is not available in Lookups for performance reasons.