I should specify the Rails environment like RackEnv staging
for Rails versions >= 3.x
This config fixed the issue.
anand@app-Staging:/etc/apache2/sites-enabled$ cat app_staging
<VirtualHost *:80>
ServerName myappstaging.org
ServerAlias *.myappstaging.org
DocumentRoot /home/anand/public_html/app_staging/current/public
RackEnv staging
RewriteEngine on
RewriteCond %{REQUEST_METHOD} ^OPTIONS
RewriteRule .* - [R=405,L]
XSendFile on
</VirtualHost>