The problem is with the latches themselves, they are slightly bent outwards (radially away from the hinges). Maybe it happened due to frequent opening/closing of the lid, or some sort of manufacturing defect. I wasn't able to take the latches out and replace them though. When the latches are bent outwards, they tend to go between the slider and the laptop casing.
The solution is:
1. Work on one latch, either the left one or the right one.
2. Use a soldering iron to heat the latch side facing the hinges (the inner side). The soldering iron should contact the latch. At the same time, apply some pressure and push the latch towards the hinges (inwards).
3. If done correctly, the latch will bend back and the lid will close nicely again. Check by swinging the lid so that it almost closes, and peek from the sides to see if it is indeed positioned correctly.
4. Do the procedure for the other latch.
Sorry for the messy explanation, I just thought there may be other users facing this same problem. I hope this post will be of help.
If you need further explanation, I will be happy to assist / explain more.
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