Solution
This is a known issue tracked as Bug#282285. In summary due to this bug, ssh client and sshd server running on these boxes may negotiate FIPS-disallowed cipher curve25519. FIPS closes such connection resulting in connection failure. Fix for this bug will be included RiOS 9.6.0b (ETA 1st week of June, 2017).
Workaround: Disable FIPS on steelhead during RiOS upgrade from SCC/CMC.
Fix it by upgrading to RiOS 9.6.0b.(ETA 1st week of June, 2017)