Hi Ravi,
We had a support ticket open with ESRI Canada, but couldn't reproduce the issue. We believe the issue is likely related to the servers configuration. Testing on two identical physical servers the issue is easily reproducible. We also setup a third server in a virtual environment and cannot reproduce the issues. We are currently trying to track down the issue on the physical boxes. We enabled Failed Request Tracing in IIS with a 20 sec connection timeout. The tracing again indicates that the process is getting hung-up on the ResolveRequestCache. Other than rebuilding the physical machines we are running out of things to try.