Parse Server & Dashboard restarting on PM2 causing 502 Bad Gateway - nginx

Question

I have installed Parse Server and Parse Dashboard on an AWS EC2 instance (Ubuntu 14.04). I am using pm2 process manager to configure and run both applications and nginx to serve as a proxy server.
Both applications are working fine and I can access them from the client. The problem however is that when I access Parse Dashboard (which internally performs calls to local Parse Server) majority of the POST commands are returned with 502 Bad Gateway error.
After some investigation I suspect pm2 is the problem as it keeps on restarting applications after some time since all the POST commands are executed at the same time. I set the max_memory_restart parameter to 500M and killed & restarted apps but no difference.
I must mention I am using pm2 for the first time. So did I configure pm2 wrong or am I missing something here? pm2 error logs are empty.
Nginx error log shows the following:
2016/08/12 08:39:56 [error] 7792#0: *23 connect() failed (111: Connection refused) while connecting to upstream, client: xxx, server: xxx, request: "POST /parse/classes/AccountingDrawer HTTP/1.1", upstream: "http://127.0.0.1:1337/parse/classes/AccountingDrawer", host: "xxx", referrer: "https://xxx/dashboard/apps/myapp/browser/_Role"
Nginx default config
server {
listen 443;
server_name xxx;
root /usr/share/nginx/html;
index index.html index.htm;
# log files
access_log /var/log/nginx/parse.access.log;
error_log /var/log/nginx/parse.error.log;
ssl on;
# Use certificate and key provided by Let's Encrypt:
ssl_certificate /etc/letsencrypt/live/xxx/fullchain.pem;
ssl_certificate_key /etc/letsencrypt/live/xxx/privkey.pem;
ssl_session_timeout 5m;
ssl_protocols TLSv1 TLSv1.1 TLSv1.2;
ssl_prefer_server_ciphers on;
ssl_ciphers 'EECDH+AESGCM:EDH+AESGCM:AES256+EECDH:AES256+EDH';
# Diffie-Hellman parameter for DHE ciphersuites, recommended 2048 bits
ssl_dhparam /etc/nginx/ssl/dhparam.pem;
# Pass requests for /parse/ to Parse Server instance at localhost:1337
location /parse/ {
proxy_set_header X-Real-IP $remote_addr;
proxy_set_header X-Forwarded-For $proxy_add_x_forwarded_for;
proxy_set_header X-NginX-Proxy true;
proxy_pass http://localhost:1337/parse/;
proxy_ssl_session_reuse off;
proxy_set_header Host $http_host;
proxy_redirect off;
}
# Pass requests for /dashboard/ to Parse Dashboard instance at localhost:4040
location /dashboard/ {
proxy_set_header X-Real-IP $remote_addr;
proxy_set_header X-Forwarded-For $proxy_add_x_forwarded_for;
proxy_set_header X-NginX-Proxy true;
proxy_pass http://localhost:4040/dashboard/;
proxy_ssl_session_reuse off;
proxy_set_header Host $http_host;
proxy_redirect off;
}
location / {
try_files $uri $uri/ =404;
}
}
pm2 ecosystem.json
{
"apps" : [{
"name" : "parse-server-wrapper",
"script" : "/usr/bin/parse-server",
"watch" : true,
"merge_logs" : true,
"cwd" : "/home/parse",
"env": {
...
},
"max_memory_restart": "500M",
"instances" : 2,
"exec_interpreter" : "node",
"exec_mode" : "cluster"
},
{
"name" : "parse-dashboard-wrapper",
"script" : "/usr/bin/parse-dashboard",
"watch" : true,
"merge_logs" : true,
"cwd" : "/home/parse",
"max_memory_restart": "500M",
"env": {
"HOST": "localhost",
"PORT": "4040",
"MOUNT_PATH": "/dashboard",
"PARSE_DASHBOARD_ALLOW_INSECURE_HTTP": 1,
...
}
}]
}