I am able to resolve it finally. No need to upgrade the kernel for the wifi(Intel 3165 card) to work. Though Intel claims that it's certified for kernel 4.1+ only - I can see that my setup is working fine for last 2 hours.
I referred to this link another thread on AskUbuntu on this topic
as well as another link on AskUbuntu
then finally got the two files from git using
git clone https://github.com/OpenELEC/iwlwifi-firmware.git
Essentially one need to follow these steps:
sudo apt-get update
sudo apt-get install linux-headers-generic build-essential
wget https://www.kernel.org/pub/linux/kernel/projects/backports/2015/11/20/backports-20151120.tar.gz
tar -zxvf backports-20151120.tar.gz
cd backports-20151120
make defconfig-iwlwifi
make
sudo make install
iwlwifi-7265D-13.ucode and iwlwifi-7265-13.ucode needs to be copied under /lib/firmware
cd /lib/firmware
sudo cp iwlwifi-7265D-13.ucode iwlwifi-3165-9.ucode
sudo cp iwlwifi-7265-13.ucode iwlwifi-3165-13.ucode
sudo reboot
You need to look for the 7265 firmware file and rename it for 3165. This will make it work.
Mine is HP Slip Laptop with Nvidia graphics card(GTX 950M). I couldn't afford to upgrade the kernel as there are some issues for the nvidia graphics card and some of the softwares i am using they can only run on 14.0.4 NOT 15.10.
Update:
After working fine for 4-5 hours...it starts disconnecting every 15 minutes. It shows all the wifi connections but connection keeps on dropping. I had some updates...may be they might have broken it now...So don't know how this will be fixed? Any help? Or the only option is to upgrade to kernel 4.2?
Final Upate
I upgraded to Linux Kernel 4.2.5 and also started making use of nvidia 352 driver. All the issues are resolved as of now. Got some problems with the nvidia with kernel 4.1.5 otherwise that also fixed the wifi driver issue.
sudo apt-get purge nvidia*
sudo reboot
sudo add-apt-repository ppa:graphics-drivers/ppa
sudo apt-get update
sudo apt-get install nvidia-352
sudo reboot
Note while getting nvidia-358 - I got some warning messages and they suggested use 352. Tried 361 also but it was giving problems in my case at least.
Please follow these steps for upgrading of kernel
$ cd /tmp
$ wget \
kernel.ubuntu.com/~kernel-ppa/mainline/v4.2.5-wily/linux-headers-4.2.5-040205_4.2.5-040205.201510270124_all.deb \
kernel.ubuntu.com/~kernel-ppa/mainline/v4.2.5-wily/linux-headers-4.2.5-040205-generic_4.2.5-040205.201510270124_amd64.deb \
kernel.ubuntu.com/~kernel-ppa/mainline/v4.2.5-wily/linux-image-4.2.5-040205-generic_4.2.5-040205.201510270124_amd64.deb
$ sudo dpkg -i linux-headers-4.2*.deb linux-image-4.2*.deb
in case something goes wrong
sudo apt-get remove linux-headers-4.2* linux-image-4.2*