I have to write a query wherein i need to allocate a ID (unique key) for a particular record which is not being used / is not being generated / does not exist i
The correct way is to use an identity column for the primary key. Don't try to look at the rows already inserted, and pick an unused value. The Id column should hold a number large enough that your application will never run out of valid new (higher) values.
In your description , if you are skipping values that you are trying to use later, then you are probably giving some meaning to the values. Please reconsider. You probably should only use this field as a look up (a reference) value from another table.
Let the database engine assign the next higher value for your ID. If you have more than one process running concurrently, you will need to use LAST_INSERT_ID() function to determine the ID that the database generated for your row. You can use LAST_INSERT_ID() function within the same transaction before you commit.
Second best (but not good!) is to use the max value of the index field plus one. You would have to do a table lock to manage the concurrency issues.