What are the potential damages that can occur if I upload a wrong Option File in iDirect Modem. Suppose Modem serial is X and I upload Option File of Modem Serial Y.

Does the modem get faulty??

Modem gets corrupted and you will need to recover it. You might not be abe to login.

falcon_monitor (daemon) will detect a corruption or incompatibility and restart the modem...likely causing it to go into a constant reboot cycle.  As mentioned above, you may or may not be able to access eth0.  If you do have access to eth0 and are able to briefly log in (before a reboot), you can stop falcon service with a simple:

service idirect_falcon stop

...which will stop the reboot cycle and allow you to CAT the correct options file into it (via CLI from root.....) or you can use WinSCP to copy the new options file into the following directory:

/etc/idirect/falcon

(if you use WinSCP, please ensure that the file name is changed to:  falcon.opt