Hi SubbuR,
Thanks for the information you provided via PM.
Please follow the steps below to trigger a full password sync, and then check to see if the passwords can be synced to Office 365.
1. On your DirSync machine, go to C:\Program Files\Windows Azure Active Directory Sync> Run DirSyncConfigShell.psc1.
2. In the Powershell console that loads, run the Set-FullPasswordSync cmdlet.
3. Load Services.msc.
4. Restart the Forefront Identity Manager Synchronization Service.
Once this is complete, you should see a series of EventId=656 (Password Sync Requests) and EventId=657 (Password Sync Results) indicating that your full password sync has kicked off.
Best Regards,
Edward Qu