I was able to fix the issue.
Did a Hard restart from the GRUB console. before that backed up the OS disk and also had a az vm create repair which cloned the vm.
The issue was with the walinuxagent died which also cause not ssh'in into the session.
During the Hard restart from GRUB, I selected an old kernel version, which I believe, it reverted the updates and able bring the agent back online.
Thank for your time.
Sai