Just placing the log file in another directory inside logs helped. Thank you for your assistance!!

Somehow the application was acquiring file handles on every file inside logs folder and did not let logback delete the files as per policy.

Old
<fileNamePattern>logs/application_%d{yyyy-MM-dd}.%i.log.zip</fileNamePattern>

New
<fileNamePattern>logs/api/application_%d{yyyy-MM-dd}.%i.log.zip</fileNamePattern>