Dear Colleagues,
This issue is resolved with the newest version of the Proxy! I installed the latest available Proxy file from the Fiori pages and did the setup of Proxy as desired, just in this case on the installed Eclipse which comes with the Fiori Installation(Kepler). The one i was using for UI5 dev was Eclipse Juno.
As I had some other issues with Templates when using the https Odata services, so i decided to reinstall the whole environment.
Now the issue is resolved.
Thanks to those who took the pain to read the problem.
Cheers,
Sumit