Transparent Mode results in Retransmissions on TCP SYN

Question

I have set up a NGINX reverse proxy with the following configuration using Stream context and also enabled the transparent mode so that I can log the client IP addresses at the upstream servers.

user root

stream
{
    upstream stream_backend
    {
            server x.x.x.x:1234;

    }
    server{
            listen 443;
            proxy_bind $remote_addr transparent;
            proxy_pass stream_backend;

    }

}

When the transparent mode is enabled, the incoming packets are not received at the server (packet captures) and the packet capture on the reverse proxy just reveals a TCP SYN and retransmissions for the same. When the transparent mode is disabled, the packets are received at the server.

I made sure that nginx is running as root, firewall is disabled and tried connecting on 2 different sockets since transparent mode works by binding the sockets underneath.

Is there something I am missing with respect to the configuration, modules? How can I get this to work?

PS: Facing a similar issue using proxy protocol