What does the term "highest qualification" mean?
Highest qualification means the most advanced (i.e., highest) academic award (e.g., high school, bachelor's degree, master's degree) that you've been granted (i.e., completed).

So, 


  if I am a current undergraduate student, does that mean my highest qualification is "undergraduate degree" or should it be my high school (12th grade)?


A current undergraduate student has not yet been granted that undergraduate degree, so the student's highest degree is from high school (assuming no other relevant qualifications).