Ok finally I have done it. I have created the forgot password functionality in my client app. I have made the xmlrpc call to the base res.users's action_reset_password method as:

$.xmlrpc({

url: server_url + 'object',

methodName: 'execute',

dataType: 'jsonrpc',

params: [dbname, userId, password, 'res.users', 'action_reset_password', [id]], // id: id of the user whose pass need to be reset

success: function(response, status, jqXHR) {

    alert('success')  

},

error: function(response, status, jqXHR) {

  alert('error')

},

});