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Textbooks are highly important resources for course work as well as for research work.

Some textbooks are freely available over internet. Some textbooks can be purchased.

Is it true that there exists secret textbooks available only for the students of that particular university and for no others?

I had this doubt because one of my batch mates claimed that there is a university (say X) has its secret textbook for students as well as researchers of that university only and it is a common practice for many top end universities.

Note that I am asking about textbooks only, not regarding teaching material and others.

I have never heard of a textbook being "secret" in the sense that it was being kept intentionally hidden to give students of one organization an advantage.

I have often, however, encountered draft textbooks that a professor had not yet completed or published, for which students were partly acting as "beta testers." These are often not released for general use (for obvious reasons), and may be in preparation for many years, which could make them act something like a "secret" textbook.

Indeed, as the stage and organization of such documents becomes earlier and less formal, the boundary between "textbook" and "lecture notes" becomes unclear, and there are certainly some professors who are effectively writing a private textbook and just never get around to putting in the effort (or relaxing their perfectionism) to make it public.

Having attended two top end universities, I can say that I have never seen or heard of a proper textbook that was only for use within that university. Textbooks require a lot of time and effort, and the author (often a professor) expects to be properly compensated, which can only occur if students at many different colleges and universities purchase his book.

I did have a professor at a top university require his own properly-published book as one of the textbooks for the course. Although it was not for use only within that institution, I doubt that any other professors, whether at that university or elsewhere would use that book as a textbook.

However, at an average university, I did have a business law class where the professor had a work that he described as "your Bible", meaning it functioned as our textbook for the course. It was not a properly published textbook printed by a professional publisher, but it was 50 or a hundred pages held together with a heavy-duty staple. This was obviously not for sale to others outside the university. Whether you would consider this a textbook would depend on your definition of "textbook".

The closest thing to a "secret textbook" (apart from draft textbooks) I've encountered were sometimes referred to as 'compendia'. These were often glorified lecture notes, sometimes spanning multiple logically connected courses, tailored to the syllabi at a given institution. Hence they lacked the breadth that would make them useful as textbooks for others. Some of them also contained detailed instructions and information* about lab experiments to be done during the course(s), which obviously is of local interest only. (C.f. lab manuals.) However, they were often maintained over many years by many lecturers, and semi-professionally printed and bound by the university's printing services, and purchased by students in the university bookshop.

*I remember that at least a couple of them included reproductions of component data sheets and excerpts from equipment manuals. Given the limited distribution no one was worried about copyright issues, but a published textbook would be a different question.