Hi Sreejith,
If you remove the subreport and just have the parameter and formula on the empty main report, does the formula return all the parameters?
I'm wondering if it's your formula. Can you post what your formula is doing? You are right, what you are expecting should work. If you see a valid string in there, then add your subreport back in and link it on the formula.
In your subreport, drop the linked parameter onto the report and do you still see your string in both the main and subreport when you preview it?
If you do then add your stored procedure to the subreport and link the parameter to your Stored Procedure parameter and then test again.
The problem can be failing in the main report with the formula or it could be failing when passing the string from the main report to the subreport or it's failing when linking to the stored procedure.
Break it down and see where the issue is. You should see the string in both the main and subreport, even if the stored procedure returns no records.
Good luck,
Brian