have you checked the cached version of your pages in google search or use "fetch as googlebot" in GWT to see if you site has been hacked
How this can identify the hacking of the site. The only way is to find out any hidden outgoing spam link or through presence of a malware i guess.
it's always a good idea to check your hosting service and IP address to make sure it's not a "bad neighborhood".
Yes they have some bad domains i saw that on the list through reverse IP lookup, but why they are not highlighted as explicit site and why my site is highlited which is completely fine. Should i avoid this domain which is showing these results, if something is wrong with my site then google will send some kind of warning in webmaster tools i guess.