After researching further below are the options to resolve this issue:
- Re install the .Net Framework
- Re install the application that leads to the error ".NET Runtime version 2.0.50727.5466 - Fatal Execution Engine Error 80131506". We identified this through the eventviewer and our application log
- Install an update for your virtual machine host if you have your server running on virtual machine. This is supposedly to be a known issue.
We went through all the options and option 3 worked for us. It looked like this issue is caused by unexpected behavior in the virtual machine's monitor when set to Software Monitor mode.