Hello Ajay,
Here are answers to your questions.
Q: If they are in sleeping mode yet can they be a reason of
slow performance?
A: Sleeping means waiting for a event to occur. At any given
point in time there can be multiple connections in sleeping
mode as they will be waiting for IO, CPU, MEMORY etc.
The thing is we need to identify which resource is
which is waited most.
Q: Is there any specific number that this much user could
connect to sql server?
A: There is no specific number.
Q: Can we restrict that after 50 or 60 users connection will not
be created?
A: We can restict concurrent connection count on SQL by a
SP_CONFIGURE paramater named USER CONNECTIONS.
or
Right click on Instance Name in SSMS under object explorer
and select Properties.
Select Connections option under "Select a Page"
from Server Properties screen.
Right hand side provide values (default 0 unlimited)
under Maximum number of concurrent connectins options.
Regards
GURSETHI