OK Whole day I tried to solve my problem and I ended up with a mess.
It is a dead lock.
For sessionBean context to persist after reactivation I need to make the SEssionContext NOT transient. SO that it can get serialized during passivate.
with AS 4.0.3SP1 I cannot make it NON transient. I end up with stack overflow.
On the other hand EJB3 RC3 solves this problem but it forces mappedName in resource annotation during deployment, where as per the a JIRA this should not be except for JNDI injections.
Is there a solution solves both the problems. I also tried to build EJB3 RC3 and create a patch for deployment problem but I could not find the write set of projects as I have no idea about what branc of what to pull?
I think this is important for everyone who uses Statefull session beans with injected session contexts