Hi Bhim,
The error above is caused by the fact that the Azure Stack HCI cluster is either not yet registered with Azure or it has gone to an 'Out of Policy' state. You can run the command 'Get-AzureStackHCI' and check the 'RegistrationStatus' field.
Once an HCI cluster is created, it must be registered to Azure within 30 days and upload billing records to Azure at least once every 30 days thereafter. If this does not happen, the cluster will move into a limited functionality mode which will prevent new VMs from being created. It will also prevent VMs from being able to be live migrated within the cluster.
Once the cluster is back in-policy, this should resolve the error above.
Hope this helps!