As far my understanding goes, it will provide access to SECURITY tab where user can see Manage Users & Device group Permissions.

I have to clarify that access to Security tab is actually enabled/disabled by the global permission " Manage Console Security",  and NOT  by the "Lookup Users and Group Membership" permission

Yes, that's right!

"Manage console security" which is a global permission provides access to the Security tab. I have tried this.

As my understanding goes "Lookup Users and permissions" must be related to permissions for users to add/remove user groups under membership section in "Security tab". 

Eventhough i denied this permission i was still able to make changes under Membership tab. Hence wanted clarity on this permissions.

The "Lookup Users and Group Membership" permission has been added in MobiControl for about a year.   However, the online documentation does not describe clearly what it does, and frankly speaking, I haven't spent much time investigating exactly what it affects. 

However, I strongly believe that the "users and groups" in this configurable option actually refer to LDAP users and LDAP groups, NOT web-console users and device groups.  Perhaps someone from Soti can confirm this with an official answer.