Search text in Text File

Yes, the Dropbox API does offer the ability to search for a particular query in a particular file type under a particular path. I see you're using searchBuilder though, which is deprecated, so you should update to searchV2Builder instead. The SearchV2Builder documentation shows what methods/parameters you can use.

A 'not_found' error like you're getting indicates that there's nothing at the specified path, so make sure you're supplying a correct path value, in your code 'path2', for the connected account. I recommend reading the File Access Guide for information on interacting with the Dropbox filesystem via the API.

I tried using this code:

SearchV2Builder searchBuilder = client.files().searchV2Builder(query);
List<String> fileExtensions = Arrays.asList(extensions);
SearchOptions searchOptions = SearchOptions.newBuilder().withFileExtensions(fileExtensions).build();
SearchV2Result searchResult = searchBuilder.withOptions(searchOptions).start();
List<SearchMatchV2> searchMatches = searchResult.getMatches();

but it only searches for text file name and not for the content placed inside it. Suppose i have a word "hello" placed inside my text file named "documents" so if i starts typing "he" then the word "hello" should appear in searches from "documents" file. Is the possible as i am having different text files and that should search in all of the text files before giving me the result  

It sounds like you're looking for the feature called "full-text search". That's only available to accounts with certain Dropbox plans. Please refer to the help center article for more information.