Problem with upper panel

When I minimize the size of panel then rest application windows is overlapping with it.

That depends on which applets are running together with the theme you are using.

Some applets have a fixed size that prevents the panel from being reduced too small.

Some themes add extra padding around applets.

So from 20.04 you can use a slim theme like “Pocillo-slim” and the default layout and the panel size can be reduced to around 30px.