Hi Kavya,
You can have for instance, 6 parameters:
- IsSituation1 - Boolean - that you will use on your block to know if you should use the first two parameters for situation 1 or the other 3 parameters for Situation2;
- Parameter 1 for Situation 1
- Parameter 2 for Situtation 1
- Parameter 1 for Situtation 2
- Parameter 2 for Situtation 2
- Parameter 3 for Situtation 2
Or you can have two blocks: one for situation 1 and one for situation 2 and in your parent webblock you have an If to show Block Situation 1 or Block Situation 2. The if would be the condition to show one block or the other:

Bottom line, there are several ways of achieving this, you can pick the one that makes more sense for your use case.
Regards,
João