Hello Venkatesh,
Thank you for reaching out Microsoft Community Q&A,
Based on your provided error, seems that your subnet runs out of available space and the upgrade operation failed.
As you might now for the upgrade process, an additional node is being added in order to gracefully cordon/drain and upgrade the ones one by one. More information in the official documentation: https://learn.microsoft.com/en-us/azure/aks/upgrade-cluster?tabs=azure-cli#upgrade-an-aks-cluster
That being said, for the upgrade operation you need extra IPs, one for the buffer node and if you are using azure cni network plugin, then you will need one for each pod(e.g. if you have 30 pods/node they you will need 30 available IPs).
**Workaround:
**
-In order to fix this subnet insufficient size you have the below options:
- Create a new subnet with a larger, non-overlapping range.
- Create a new node pool on the new subnet.
- Drain the pods from the old node pool that resides in the old subnet.
- Delete the old subnet and old node pool.
More information in the below documentation:
https://learn.microsoft.com/en-us/troubleshoot/azure/azure-kubernetes/insufficientsubnetsize-error-advanced-networking#solution
I hope this helps you to fix this blocker and achieve your goal. Please "Accept as Answer" and Upvote if it helped, so that it can help others in the community looking for help on similar topics. Thank you!