What is more effective in weight loss, free hand exercises or body building exercises in gym?

Low intensity . Weight loss exercise should be lower intensity than in weight maintenance. Most people are calorie restricting to lose weight. To burn fat, this is low intensity work outs that do not leave you hungry but send the message to burn fat. Once you hit maintanence, exercise intensity increases.
Both, sort of. There are a lot of factors that make up how much weight you lose over a period of time, not the least of which is diet. When you lose weight with exercise, you are mostly referring to burning fat as fuel in the oxidative phase of exercise. This is relatively independent of what "type" of exercise you are doing as long as it is relatively intense.