Thanx Artur, for the reply. Well I did try reloading the .htaccess as I had gone through the forum it didn't work form. But what I did now is something like this below in design.php page:
$var="http:\/\/192.168.0.87\/LabSchool\/Web\/http:\/\/192.168.0.87\/LabSchool\/Web\/";
$glHeader1 = preg_replace("/$var/","",$Header);
$glHeader2 = preg_replace("/href=\"/i","href=\"$site[url]",$glHeader1);
$glHeader = preg_replace("/$var/","$site[url]",$glHeader2);
This is working well in my local intranet but however this is only the temporary solution for the problem, I have to re write the URL of the live site if I upload it in live. Does anybody knows what the real problem is??