In our case implementation, we are seeing "ClosedDate" on Case object automatically setting to Current date when the case's status becomes "Completed".

This looks like the standard functionality.

Is there any way to avoid this behavior i.e avoid setting of close date when the case status becomes completed ?

We could not even update this field (ClosedDate) to NULL as this is a system field.

Attribution to: Varun

Possible Suggestion/Solution #1

Being that your business logic is counterintuitive to typical use of a Close Date, I suggest you create a new field and hide the original one from your layouts.

Attribution to: mrBlaQ
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