The problem is when user submit the form with special characters in the contact form (description field), in the mail it converts to HTML characters. After lot of debugging I nailed down the following file.
\vendor\magento\module-contact\view\adminhtml\email\submitted_form.html
the file contains
{{trans "Name: %name" name=$data.name}}
{{trans "Email: %email" email=$data.email}}
{{trans "Phone Number: %telephone" telephone=$data.telephone}}
{{trans "Comment: %comment" comment=$data.comment}}
I tried wrapping up %comment/$data.comment field with htmlspecialchars/ htmlentities functions. but it's not working.
For example, If I entered the following word (Hello' world") in the contact form, I receive as
Hello' world"