The microtiter plate is coated with antigen for detection of antibody. Antibodies are added. After that if i add biotinylated antigen (same as coated), then strepavidin HRPO, substrate. I have observed backgruond in known positive and known negative samples. what could be the reason? One basic question is "where would the biotinylated antigen bind on antibody if specific region is already bound to coated antigen".

If you are seeing non-specific background, your blocking step is probably not doing its job - try using other proteins to block.
Also, your assay seems weird - if you are trying to detect Abs against a specific antigen, you just coat your plate with antigen, block, add samples possibly containing specific Abs, PBS (-ve) and +ve Ab controls, followed by an anti- species/isotype Ab-HRP or Ab-biotin/strepavidin-HRP, followed by developer substrate. I don't see where the two sets of Ag come into the picture!