Hello Ramakrishnan
H1 knows the address of H2, in most cases, simply because a user has input it. For example, if H2 is an email server, then the email client of H1 has been manually configured to reach that email server. If H2 is a web server, then H1 has used a DNS lookup service for www.ip-address-of-h2.net, for example, and resolved the destination address for that host.
Note also that LISP is a feature that interconnects subnets. What I mean is, the gateways of both H1 and H2 are found within their local LISP sites. This means that Layer 2 protocols such as ARP remain within the local sites. Only routing functions operate between LISP sites and the RLOC space. So you would never see ARP requests traversing the RLOC space.
I hope this has been helpful!
Laz