Geetisri,
I can't tell you technically why this occurs but I believe there is an open issue with it in terms of Esri looking into it. The limit is on both the MXD and the normal.mxt and you can only have, as you discovered, up to about 19/20 of the same open at any one time. A workaround for the MXD is to merely copy the MXD to a new name and open it 19/20 times, copy another, etc. I am not sure though how to get around the normal.mxt issue. In testing in Terminal Server environments we would just use different users to avoid this.
Jeff DeWeese
Sr. Systems Architect - Esri