FoundResolved the problemissue..
The local hostwebservice my Apex code was bound by firewall restrictionstrying to invoke is hosted on a server that can't be accessed from outside the organization. See The firewalls restrict API calls coming from outside of the network. As as result Salesforce (which is on the cloud) was unable to access that webservice. Resolution: We migrated the web service to an environment which is hosted on the server that allows calls from the internet. In this environment, we use a two way SSL and a stringent authentication mechanism to be able to get the response below