I'm not using use strict or use warning in my script.

Well the find sub is not shown as it comes from the package use File::Find.

My script is quite big, should I paste it fully here or is there a way to attach it ?

One more observation meanwhile, if I change the second find call from find(\&findb, "/pqr") to find(&findb, "/pqr"), it does enter findb sub now but the file pointed by $File::Find::name is still from the /abc/xyz folder, i.e file1.

2nd Output: In findb, /abc/xyz/file1

Hello pnaik!
It's well worth reading this: How do I post a question effectively? :)
You should always have "use strict" and "use warning" near the start of your script (except in trivial scripts). They'll save you a lot of time catching bugs at compile time.

I tried running this:

use strict;
use warnings;
use File::Find;

sub finda
{
    print "In finda, $File::Find::name\n";
}

sub findb
{
    print "In findb, $File::Find::name\n";
}

find (\&finda, "/abc/xyz");
find (\&findb, "/pqr");
[download]

and got this result:

In finda, /abc/xyz           # a folder
In finda, /abc/xyz/file1     # a file
In findb, /pqr               # a folder
In findb, /pqr/file2         # a file
[download]

This is what you expected (apart from the 2 folders)
So, as the snippets of code you provided behave as expected, you need to post your code before we can help further.

Update: I mean: post a minimal script that reproduces your problem.
(This is all covered in How do I post a question effectively? !)

One more observation meanwhile, if I change the second find call from find(\&findb, "/pqr") to find(&findb, "/pqr"), it does enter findb sub now but the file pointed by $File::Find::name is still from the /abc/xyz folder, i.e file1.

That is to be expected. It actually calls findb() before calling File::Find::find() -- that's what the syntax means. It's not a subroutine reference but a call.

Anyway, there is no problem with your code as you've posted; I'd look into other possible problem areas such as file system permissions and the logic in the rest of your script

I found the issue, I showed wrong sequence of 'find' calls, actually the find was getting called recursively, and in that it retains the context of parent call probably. I was thinking it to be a re-entrant function, but looks like its not. This is how it looked :

sub finda
{
    print "In finda, $File:Find:name\n";
    find (\&findb, "/pqr");    
}

sub findb
{
    print "In findb, $File:Find:name\n";
}

find (\&finda, "/abc/xyz");
[download]

Anyways, now I have changed the script to have the recursive nature removed, so that the two calls happens sequentially and now its working fine. Sorry for the wrong code and very thankful for your help indeed !