When I check the relationship between Account and contact in schema builder I found it lookup from contact to Account. Which mean when Account is deleted contact should not get deleted as per it is in lookup relationship. But the contact related to account is getting deleted. Why this is happening in this case. Can any one here can help me out to get the solution over this issue.
It seems that Accounts are a bit different when it comes to related contacts - even though your contact is a lookup relationship:
Deleted accounts are moved to the Recycle Bin, along with these associated items: -Contacts -Opportunities -Contracts (if they're not activated) -Activities -Notes -Attachments -Portal roles and groups (if all portal users in the account are disabled.) -Partner relationships -Relationship group members
Basically in this special case, Contacts and Accounts have a pseudo Master-Detail relationship. Unfortunately you can't do anything about this - other than using something like a Junction Object to protect your Contact.
In a one-step delete the contacts will be deleted too but you can prevent it be emptying their account relation (which makes them private contacts - again somthing special) or you can reparent them to another account if it's possible or you can create a helper account to host them for the time being.