I tried reversing as well as moving forward by jerking the clutch, then moving forward/backward in quick succession : it wouldnt work.
Today, got it serviced at ABT , and it is now fixed. What you said is right, headers : looks like the previous owner has not used it much in 4WD, so it was not lubricated well. Now they have lubricated it well, and also changed the t-case oil. The 4WD selector works super-smoothly now

. Cost of servicing Rs650/-.