Hello Kuldeep Singh(OT),
Thanks for your question.
I will recommend the following:
Verify that Encryption at Host is indeed enabled for all your VMs. You can do this through the Azure portal or Azure CLI. To do this with CLI, see:
az vm encryption show --name MyVirtualMachine --resource-group MyResourceGroup
If confirmed it is enabled, then Give it some time (up to 24 hours) for Azure to refresh its recommendation status.
See: https://learn.microsoft.com/en-us/azure/virtual-machines/windows/disk-encryption-overview
Regards,
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