WORKAROUND:
----------
Run the following commands(saves a backup of the old lists and creates a new 
lists folder) and the BADSIG error does not occur :

$ cd /var/lib/apt
$ sudo mv lists lists.old
$ sudo mkdir -p lists/partial
$ sudo apt-get update


Worked just fine

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https://bugs.launchpad.net/bugs/24061

Title:
  GPG error with apt-get/aptitude/update-manager behind proxy (BADSIG
  40976EAF437D05B5)

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