Solution for this problem:
The following code will fix the error.
try
{
// create Image Object using rear image byte[]
Image imag = Image.FromStream(new MemoryStream(imageR));
// Derive BitMap object using Image instance, so that you can avoid the issue
//"a graphics object cannot be created from an image that has an indexed pixel format"
Bitmap img = new Bitmap(new Bitmap( imag ));
}
catch (Exception ex)
{
MessageBox.Show(ex.Message);
}