Hey @Balachandran Kannan ,
Based on my knowledge, as of today ADF does not support reading password protected files.
You can add your feedback: https://feedback.azure.com/forums/34192--general-feedback/suggestions/40677769-azure-data-factory-decompress-zip-files-with-pas
However you can copy the file from SFTP to blob location as is via ADF and then use Azure functions/ Custom activity for unzipping the pwd protected file .
Reference:
https://stackoverflow.com/questions/61435153/data-factory-unzip-a-password-protected-zip