If a script is in ban for rest of the period till expiry then, the one who has taken future lot, won't he be in a loss (as most of the time share price of security under ban fall down)?

When a security is in ban, you can't take fresh positions, but you can exit positions that you are holding.

Our futures margin file shows all securities in ban, if you need a ready reference

How badly does it affect liquidity then, since you can square-off only with a party which also wants to square off in the opposite direction.

When you are selling it.somone has to buy right ? How does this work in that case? It will be a new position for his/her to buy . am I making sense?

I’ll try to explain.

Let us say on day 1 there are three groups of traders Buyers, Sellers and Not Interested.
Sellers sell the futures of JPAssociates to Buyers. At the end of the day, JPA as usual goes into ban.
Now, on day 2, only those in the Buyers group can sell Futures of JPA to those in the Sellers group. It is the Not Interested guys that cannot do anything. Also, those in Buyers cannot sell and then buy back, neither can those in the Sellers group buy and then sell again.

If enough number of Buyers sold, and Sellers bought, the scrip comes out of ban, else everyone just continues to wait.