Hi @Golakoti Siva,
Hope everything is going well.
When you encrypt an Excel file with a password and store it on SharePoint, it can interfere with the ability to co-author the document.
This should be a limitation of Excel. When editing a password protected Excel file, the file will indicate that the file is read-only and warn that it is not possible to co-author the file.
For more information, please check the link: Troubleshoot co-authoring in Office (microsoft.com)
We also tested this in our internal environment. When a user tries to edit a password protected Excel file at the same time, he is prompted that another user is editing it.
We feel regretful to inform you that we do not have a solution to allow co-authoring of password protected files at this time.
If there is anything else we can do for you, please feel free to contact us.
Moreover, if the answer is helpful, please click "Accept Answer" so that we can better archive the case and the other community members who are suffering the same issue can benefit from it.