@ishantkhurana what you are describing is called Ghost Touching and originates from a bad display assembly. Time to replace teh screen.
Since iFixit does not yet have a specific guide for this use something like [link|https://www.youtube.com/watch?app=desktop&v=f7R_rA4BkrE|this video] Replacement displays are readily available at many online stores.
While you work on your phone, take lots of pictures. Once you are done with it, take those pictures and create a guide for iFixit. That will help the next person that has a device with the same issues as you do. It's easy and fun to create these guides. https://ifixit.com/Guide/new The iFixit community will appreciate this.
Repair is War on Entropy!