First of all thanks to dear Hashim Nawaz for his support.
Although i identified the issue but due to lack of time i was unable to post the solution here.
In my case, the fog lights have been installed by a local electrician. He took supply of +ve from the ignition switch and took this out to the engine chamber through an On/Off switch (in dashboard near mirror adjustment switch). Negative and Positive are taken from the battery directly without any fuse (really a dangerous stunt). The +ve wire from dashboard is used to On/Off the 12v relay which is operating the fog lights.
Due to direct wrapping of the wires on battery terminals, the wires got carbon and were covered with the sulfates(powder that deposits on terminals due to acid fumes) causing sparking due to poor conduction.
Now, i got thimbles and mounted the wires properly on the battery along with wire fuse for safety. Fog lights are now working perfectly.
My personal opinion and suggestion for all car owners;
Always try to DIY as one can do a best for his vehicle. Its really tough to get good electricians that take care of basic things like proper soldering of the wires, use of thimbles, fuses, hot tape to cover the wires in engine chamber etc. etc.
Just like in this case, direct cable from dashboard was not properly covered and was touching the car body and may have caused a disaster.