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Basically I want to keep upper edge more curved and the lower edge less curved but with shape builder tool I am not able to do this and while viewing the same scenario in outline mode I am getting this .
Ensure that your shapes are expanded 'Object' > 'Expand Appearance'. Seems to me like the rounded corners aren't "commited" to the objects.
'Object' > 'Expand Appearance'
Required, but never shown