The close friends had a famous falling-out following an incident at a party when the Don 2 actor allegedly slapped Farah's husband Shirish Kunder after he made derisory comments about Ra.One on Twitter.
In an interview with The Times of India, the choreographer-turned-director said: "Our friendship is even better than it used to be as we do not take each for granted. It's a bit like your relationship with your sibling where you may stop talking to them for a while but you can't ever sever ties for life.
"In the days that we were not talking, Shah Rukh was very disturbed even though both of us put up an act of being nonchalant. I can tell you that I, for one, spent several sleepless nights before we broke up. Recently, he showed me a chapter from his book which he has written about me and as I read it, I began to cry.
The Shirin Farhad Ki Toh Nikal Padi actress said that Shah Rukh's wife Gauri was instrumental in their reconciliation and she now accepts that Shah Rukh and her husband will never be best friends.
"I am close to Gauri now," she explained. "She really initiated and played a big role in restoring our relationship. She knows I genuinely love Shah Rukh. It's like when you are newly married, you always try to get your mother and your wife to be best of friends but with time you come to terms with reality.
"I know Shah Rukh and Shirish will never be best of friends but they know that it is me they both love. I will now never force them to become best friends but only want them to be comfortable with each other. Today they have an understanding."
Shah Rukh and Farah are to work together again on the film Happy New Year, five years after their last movie Om Shanti Om.
Watch the song 'Deewangi Deewangi' from the film Om Shanti Om below.