Asanka, I had a similar issue and found that I was not hitting the correct controller method -
I added a reference to the controller I wanted to call i.e.
<li><a href=",%= url_for :controller => :Model_name_were_controller_is_located , :action => :method_name%> Label-name,/a></li>
I also changed to log level to 0 in the rhoconfig.txt (rhodes log property) which added the additional tracing in the console dialog - helped me see where the app was at.
Hope this helps: