The default configurations led to 502 Gateway error which was resolved after commenting out ip_addersses() module. I have site running the same version of django running on localhost. Debug=False is not serving static files even on localhost.

Settings.py

"""
import os
import netifaces

BASE_DIR = os.path.dirname(os.path.dirname(__file__))

## Quick-start development settings - unsuitable for production
## See https://docs.djangoproject.com/en/1.6/howto/deployment/checklist/

## SECURITY WARNING: keep the secret key used in production secret!
SECRET_KEY = '[redacted]'

## SECURITY WARNING: don't run with debug turned on in production!
DEBUG = False

ALLOWED_HOSTS = ['www.naulo.com.np', '159.89.170.8', 'http://159.89.170.8/', '*', 'naulo.com.np']

## Application definition
INSTALLED_APPS = (
    'django.contrib.admin',
    'django.contrib.auth',
    'django.contrib.contenttypes',
    'django.contrib.sessions',
    'django.contrib.messages',
    'django.contrib.staticfiles',
    'base'
)

MIDDLEWARE_CLASSES = (
    'django.middleware.security.SecurityMiddleware',
    'django.contrib.sessions.middleware.SessionMiddleware',
    'django.middleware.common.CommonMiddleware',
    'django.middleware.csrf.CsrfViewMiddleware',
    'django.contrib.auth.middleware.AuthenticationMiddleware',
    'django.contrib.messages.middleware.MessageMiddleware',
    'django.middleware.clickjacking.XFrameOptionsMiddleware',
)

ROOT_URLCONF = 'django_project.urls'

TEMPLATES = [
    {
        'BACKEND': 'django.template.backends.django.DjangoTemplates',
        'DIRS': []
        ,
        'APP_DIRS': True,
        'OPTIONS': {
            'debug': DEBUG,
            'context_processors': [
                'django.template.context_processors.debug',
                'django.template.context_processors.request',
                'django.contrib.auth.context_processors.auth',
                'django.contrib.messages.context_processors.messages',
            ],
        },
    },
]

WSGI_APPLICATION = 'django_project.wsgi.application'

## Database
## https://docs.djangoproject.com/en/1.6/ref/settings/#databases

DATABASES = {
    'default': {
        'ENGINE': 'django.db.backends.sqlite3',
        'NAME': os.path.join(BASE_DIR, 'db.sqlite3'),
    }
}

## Password validation
## https://docs.djangoproject.com/en/2.0/ref/settings/#auth-password-validators

AUTH_PASSWORD_VALIDATORS = [
    {
        'NAME': 'django.contrib.auth.password_validation.UserAttributeSimilarityValidator',
    },
    {
        'NAME': 'django.contrib.auth.password_validation.MinimumLengthValidator',
    },
    {
        'NAME': 'django.contrib.auth.password_validation.CommonPasswordValidator',
    },
    {
        'NAME': 'django.contrib.auth.password_validation.NumericPasswordValidator',
    },
]

## Internationalization
## https://docs.djangoproject.com/en/1.6/topics/i18n/

LANGUAGE_CODE = 'en-us'

TIME_ZONE = 'UTC'

USE_I18N = True

USE_L10N = True

USE_TZ = True

# Serving media in production/server
STATIC_URL = 'static/'
STATICFILES_DIRS = [
    os.path.join(BASE_DIR, "static_cdn"),
    # '/var/www/static/',
]
MEDIA_URL = 'media/'
STATIC_ROOT = os.path.join(BASE_DIR, "static")
MEDIA_ROOT = os.path.join(BASE_DIR, "media")

## Find out what the IP addresses are at run time
## This is necessary because otherwise Gunicorn will reject the connections
def ip_addresses():
    ip_list = []
    for interface in netifaces.interfaces():
        addrs = netifaces.ifaddresses(interface)
        for x in (netifaces.AF_INET, netifaces.AF_INET6):
            if x in addrs:
                ip_list.append(addrs[x][0]['addr'])
    return ip_list

    ## Discover our IP address
# ALLOWED_HOSTS = ip_addresses()

/etc/nginx/sites-available/django

upstream app_server {
    server unix:/home/django/gunicorn.socket fail_timeout=0;
}

server {
    listen 80 default_server;
    listen [::]:80 default_server ipv6only=on;

    root /usr/share/nginx/html;
    index index.html index.htm;

    client_max_body_size 4G;
    server_name _;

    keepalive_timeout 5;

    ## Your Django project's media files - amend as required
    location /media  {
        alias /home/django/django_project/django_project/media;
    }

    ## your Django project's static files - amend as required
    location /static {
        alias /home/django/django_project/django_project/static;
    }

    ## Proxy the static assests for the Django Admin panel
    location /static/admin {
       alias /usr/lib/python2.7/dist-packages/django/contrib/admin/static/admin/;
    }

    location / {
            proxy_set_header X-Forwarded-For $proxy_add_x_forwarded_for;
            proxy_set_header Host $host;
            proxy_redirect off;
            proxy_buffering off;

            proxy_pass http://app_server;
    }

}

/etc/nginx/nginx.conf

user www-data;
worker_processes auto;
pid /run/nginx.pid;

events {
    worker_connections 768;
    # multi_accept on;
}

http {

    ##
    # Basic Settings
    ##

    sendfile on;
    tcp_nopush on;
    tcp_nodelay on;
    keepalive_timeout 65;
    types_hash_max_size 2048;
    # server_tokens off;

    # server_names_hash_bucket_size 64;
    # server_name_in_redirect off;

    include /etc/nginx/mime.types;
    default_type application/octet-stream;

    ##
    # SSL Settings
    ##

    ssl_protocols TLSv1 TLSv1.1 TLSv1.2; # Dropping SSLv3, ref: POODLE
    ssl_prefer_server_ciphers on;

    ##
    # Logging Settings
    ##

    access_log /var/log/nginx/access.log;
    error_log /var/log/nginx/error.log;

    ##
    # Gzip Settings
    ##

    gzip on;
    gzip_disable "msie6";

    # gzip_vary on;
    # gzip_proxied any;
    # gzip_comp_level 6;
    # gzip_buffers 16 8k;
    # gzip_http_version 1.1;
    # gzip_types text/plain text/css application/json application/javascript text/xml application/xml application/xml+rss text/javascript;

    ##
    # Virtual Host Configs
    ##

    include /etc/nginx/conf.d/*.conf;
    include /etc/nginx/sites-enabled/*;
}


#mail {
#   # See sample authentication script at:
#   # http://wiki.nginx.org/ImapAuthenticateWithApachePhpScript
# 
#   # auth_http localhost/auth.php;
#   # pop3_capabilities "TOP" "USER";
#   # imap_capabilities "IMAP4rev1" "UIDPLUS";
# 
#   server {
#       listen     localhost:110;
#       protocol   pop3;
#       proxy      on;
#   }
# 
#   server {
#       listen     localhost:143;
#       protocol   imap;
#       proxy      on;
#   }
#}