Why are stocks F&O contracts settled physically instead of in cash?
To keep volatility in check. If I am not wrong, that is.
So indirectly to protect option writers
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I think it has given a sense of realism and meaning to the Options Drama. It is Sebi telling us that Options are real and not pretense 
In any case, those who dont want to see it to conclusion can exit before expiry…
The basic principle is to curb speculation and use F&O for its actual purpose i.e hedging.
Since call option is an option, why i am forced to take delivery. it should be an optional for me to take delivery? is there a way i can set in system that do cash settlement for me instead of delivery?
No one is forced to take delivery… One can exit that is square off his/her open option contracts before expiry, and in that case it will be cash settled … One have to take or give delivery only when the contract expires ITM on expiry…
Call option is a contact on which you are betting with a bullish view…
It’s the margins which are increased near expiry even for long positions in options.