Ok, I have made some progress in the regard of the problem. Two consecutive sparks on the same point made me think that the maybe the power lines of DC bus are coupling on the IGBT board. I rearranged the wiring connections and placed a 100nF (400V) decoupling capacitor. Now the voltage is not going negative, but it stabilizes at around +8V - +12V, however, the DC bus volatage is +100V (ofcourse from the voltage divider, at the moment). The situation has gotten a little better, but
1. Will the voltage divider based DC bus wont work in the presence on no load on IGBT's (i.e. their output is open circuit, they are just switching at 20kHz)
2. How to achieve rated bus voltage at the IGBT's (maybe an issue of decoupling, capacitor size or something related)??
P.S. The inductor from the power supply have been removed, but the output is still being taken from the between the voltage divider (of course, for testing purposes and IGBT's arent sourcing/sinking to/from any output.)