@Sanjeevkumar Madhubharamannavar
Thanks for reaching out on Microsoft Q&A Platform.
The issue is mostly due to the image that you are using for deploying the VM and it is not prepared properly. Would recommend to recreate the image and try again to deploy VM.
When converting the VHD there is a possibility that the disk may be configured as a dynamic disk which will not work with Azure. Please refer this link for converting to a fixed VHD.
Also, please check this documentation for preparing Ubuntu VHD for upload to Azure.
Below are few reference documents:
Bringing and creating Linux images in Azure.
Understand common error messages when you manage virtual machines in Azure.
Troubleshoot deployment issues when creating a new Linux VM in Azure.
This document has the error causes mentioned.
Hope that helps.
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