Faye chat application failing on web server (bluehost)

This is more of a network question , I believe. Not sure what the issue is. I have a chat application which uses faye and it runs fine on my system(rails app) with localhost:3000 having faye mounted on it.I recently deployed this rails app onto bluehost server and when I try to use the faye client on browser ,its giving me this error:

WebSocket connection to 'ws://chat.xyz.com/faye' failed: Error during WebSocket handshake: Unexpected response code: 500

GET http://...chat.xyz.com/faye?message=%5B%7B%22channel%22%3A%22%2Fmet…ing%22%5D%2C%22id%22%3A%221%22%2C%22ext%22%3A%7B%7D%7D%5D&jsonp=jsonp3 GET http://...chat.xyz.com/faye?message=%5B%7B%22channel%22%3A%22%2Fmet…ing%22%5D%2C%22id%22%3A%221%22%2C%22ext%22%3A%7B%7D%7D%5D&jsonp=jsonp4

GET http://...chat.xyz.com/faye?message=%5B%7B%22channel%22%3A%22%2Fmet…ing%22%5D%2C%22id%22%3A%221%22%2C%22ext%22%3A%7B%7D%7D%5D&jsonp=jsonp5

GET http://...chat.xyz.com/faye?message=%5B%7B%22channel%22%3A%22%2Fmet…ing%22%5D%2C%22id%22%3A%221%22%2C%22ext%22%3A%7B%7D%7D%5D&jsonp=jsonp6

GET http://...chat.xyz.com/faye?message=%5B%7B%22channel%22%3A%22%2Fmet…ing%22%5D%2C%22id%22%3A%221%22%2C%22ext%22%3A%7B%7D%7D%5D&jsonp=jsonp7

GET http://...chat.xyz.com/faye?message=%5B%7B%22channel%22%3A%22%2Fmet…ing%22%5D%2C%22id%22%3A%221%22%2C%22ext%22%3A%7B%7D%7D%5D&jsonp=jsonp8

GET http://...chat.xyz.com/faye?message=%5B%7B%22channel%22%3A%22%2Fmet…ing%22%5D%2C%22id%22%3A%221%22%2C%22ext%22%3A%7B%7D%7D%5D&jsonp=jsonp9

GET http://...chat.xyz.com/faye?message=%5B%7B%22channel%22%3A%22%2Fmet…ng%22%5D%2C%22id%22%3A%221%22%2C%22ext%22%3A%7B%7D%7D%5D&jsonp=jsonp10

And the failed handshakes\requests keep on getting repeated. Seeing the same on server logs also(except the 500 message obviously). The logs dont give any error apart from these repeats

Is it because of proxy\firewall issue. I recently came across an article : http://ift.tt/l1TrF1

I am not sure whether its related to blocking of requests by proxy servers.

Tried switching to secure protcol. https. Didn't help. I use a simple client like this:

var client = new Faye.Client('http://ift.tt/1EQvOyG');

Any help would be great.