Not sure which plugin is causing this. I went with the following steps and everything works fine –
1) Disabled all plugins.
2) Deleted all existing custom sidebars from theme options ->sidebar page since I found that if I reuse the existing sidebars created when the plugins are active, the widgets that are dragged into the custom sidebars do not stay.
3) Created the custom sidebars in theme options (with all plugins deactivated) and dropped widgets into the custom sidebar created.
4) Chose the sidebar in the page and custom sidebar gets displayed fine.
Pls deactivate/activate one plugin at a time and pls find the one which is causing this.