>Should I start looking for another job and leave?

Yes, I would be looking at another job where you can do what you want.

>and also I like this company so much because everyone pays respect and it has a very much good working environment.

Your question and this statement conflict with one another. How can they be respectful towards you but at the same time not give you the job you desire? That doesn't sound like a respectful relationship that you describe. Everyone being "nice" doesn't really matter if you're not doing what you want and getting the pay you deserve.

>He told me a few days ago that our IT executive only wants one developer and they are planning to choose another co-worker even if he doesn't know much about coding and development. 

So basically your manager said even though you know what you're doing, he's not going to select you over the other guy who doesn't know anything? Again, all this doesn't sound right to me and a large chunk of the story is missing.

It could be a hint that your manager is gearing you up for another gig, possibly. But I would suspect that they wouldn't be secretive about this and would tell you up front. I would go sit with the manager and have a one-on-one about what your expectations are and what the place can offer you and what they need from you to get there.

>Our manager has good relation with me.

I would go to your manager with an ultimatum (don't tell him you're going to quit though, but do make a very strong statement that you want to be a C# developer). Tell him that you are hoping to get a job as a C# developer and you don't want anything else. You did all your work, you helped your co-worker succeed, and you want a job in coding. If he says no, then start looking for another job, and turn in your notice.