You are not wrong ShubhamMishra, Networker save command is in charge of encrypting the backup data when a scheduled client backup job runs, which means, the encryption happens on client side.
Same happens when a recovering activity take place; encrypted backup data goes from Storage Node to client and then (and there) decrypted.
AES encryption directive works similar to others directives (exclusion, compression, etc); it change the way save command will do the backup and send the data to Storage Node.
NetWorker supports AES encryption. This is documented in the NetWorker Administration Guide, as well as in the following knowledgebase article:
How to encrypt data in NetWorker