The steps which I followed are
1)Assigned a key to a AD group
2) Created a policy containing network share path ( which all the members of AD group can access) and the same key which I assigned to AD group .
3)Assigned this policy to the test VM and tested .
Expected result : Once a file is copied to the shared location in test VM , it should automatically get encrypted with the group key .
But getting the error , 0x80070052 : Directory or file cannot be created in that shared location . Only on removing the policy assigned I am able to copy something in to this location itself.