An internal probe is now underway.
Police Scotland is also investigating a complaint of inappropriate behaviour made on 22 October.
The force said a report had been made about Cllr Day earlier this year but that no criminality had been established.
However, Mr Sarwar insisted his party did not know of any previous complaints against the senior Labour politician.
He said the party took decisive action as soon as they were made aware of the allegations.
“The Sunday Mail contacted us about the substance of their story, and on that same day, we took the decision to suspend Cammy day and that was the right decision,” he told The Herald.
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But asked about previous allegations, Mr Sarwar insisted: “I’ve been doing this job for three and a half years and in all that time the only time details of allegations (against Cammy Day) have been shared with me was the Sunday Mail story.
“The same day that was shared with me, he was suspended.”
But in an earlier interview, Mr Sarwar was asked to “categorically rule out” that Labour was contacted about any concerns prior to the weekend revelations, he was unable to do so.
Mr Day, 50, resigned as the leader of the Labour minority administration on Monday after facing significant calls to give up the leadership post. He did not directly address the allegations.
The statement said: “The recent commentary on my personal life is detracting from the important work this Labour-led council does for the people of Edinburgh.
“It undermines the dedicated efforts of my colleagues and council officers.
“That’s why it’s time for me to step aside as leader.
“I have yet to be contacted by the police but want to reiterate that I will cooperate fully with their ongoing inquiries.”
Mr Sarwar previously said it was “nonsense” to suggest there was a culture issue within his party after it emerged Glasgow councillor Philip Braat was suspended from Labour and charged in connection with stalking offences in October.
In November, Inverclyde Council leader Stephen McCabe was separately charged with assault and threatening or abusive behaviour.
He stepped down and leader and was suspended by Labour. He pleaded not guilty to all charges.
But amid recent complaints against the former Edinburgh City Council leader, The Herald asked Mr Sarwar if he stood by this.
Cammy Day (Image: City of Edinbrugh Council) He said: “Is there a culture in our society? Yes there is. Is every organisation susceptible to that? Of course it is.”
But he said: “What organisations choose to do in response to that is what’s important.
“I of course always want to hold my party to a higher standard given that we are the Labour party, a party that was founded on the principle of equality, so I will always hold my party to that higher standard.”
He added: “What I’m saying is no political organisation is immune from these situations.
“But I think it would be wrong to suggest that this action of one individual represents the broader institution.
“I think that would be unfair and not true.”
Mr Sarwar also said it was for councillors in Edinburgh to decide how the administration is now formed after Mr Day’s resignation as leader.
“But I will very robustly challenge anyone that wants to try and pretend that this is some kind of projection on the Labour Party.
“I would remind people that it is not my party that’s under investigation. There’s other parties that are under investigation for potential criminal behaviour. And so maybe questions should be posed to them rather than just to the Labour party.”