Thanks for the reply. The above post is my postconf -n output. Also, I did run saslfinger -c .. I didn't get any errors.
Here is the output of saslfinger:
--------------------------------------------
root@myhost:~# saslfinger -c
saslà¤à¥à¤¬à¤° 20 15:29:41 EDT 2008figuration सà¥à¤® à¤
version: 1.0.4
mode: client-side SMTP AUTH

-- basics --
Postfix: 2.5.1
System: Ubuntu 8.04.1 \n \l

-- smtp is linked to --
libsasl2.so.2 => /usr/lib/libsasl2.so.2 (0xb7dbe000)

-- active SMTP AUTH and TLS parameters for smtp --
relayhost = [relay.******t.com]:26
smtp_sasl_password_maps = hash:/etc/postfix/sasl_passwd
smtp_tls_note_starttls_offer = yes
smtp_tls_session_cache_database = btree:${data_directory}/smtp_scache


-- listing of /usr/lib/sasl2 --
total 847
drwxr-xr-x 2 root root 1472 2008-10-18 02:40 .
drwxr-xr-x 176 root root 47144 2008-10-19 19:50 ..
-rw-r--r-- 1 root root 13568 2008-04-09 17:50 libanonymous.a
-rw-r--r-- 1 root root 862 2008-04-09 17:49 libanonymous.la
-rw-r--r-- 1 root root 12984 2008-04-09 17:50 libanonymous.so
-rw-r--r-- 1 root root 12984 2008-04-09 17:50 libanonymous.so.2
-rw-r--r-- 1 root root 12984 2008-04-09 17:50 libanonymous.so.2.0.22
-rw-r--r-- 1 root root 15834 2008-04-09 17:50 libcrammd5.a
-rw-r--r-- 1 root root 848 2008-04-09 17:49 libcrammd5.la
-rw-r--r-- 1 root root 15320 2008-04-09 17:50 libcrammd5.so
-rw-r--r-- 1 root root 15320 2008-04-09 17:50 libcrammd5.so.2
-rw-r--r-- 1 root root 15320 2008-04-09 17:50 libcrammd5.so.2.0.22
-rw-r--r-- 1 root root 46332 2008-04-09 17:50 libdigestmd5.a
-rw-r--r-- 1 root root 871 2008-04-09 17:49 libdigestmd5.la
-rw-r--r-- 1 root root 43020 2008-04-09 17:50 libdigestmd5.so
-rw-r--r-- 1 root root 43020 2008-04-09 17:50 libdigestmd5.so.2
-rw-r--r-- 1 root root 43020 2008-04-09 17:50 libdigestmd5.so.2.0.22
-rw-r--r-- 1 root root 26608 2008-04-09 22:15 libgssapiv2.a
-rw-r--r-- 1 root root 1025 2008-04-09 22:14 libgssapiv2.la
-rw-r--r-- 1 root root 25260 2008-04-09 22:15 libgssapiv2.so
-rw-r--r-- 1 root root 25260 2008-04-09 22:15 libgssapiv2.so.2
-rw-r--r-- 1 root root 25260 2008-04-09 22:15 libgssapiv2.so.2.0.22
-rw-r--r-- 1 root root 13574 2008-04-09 17:50 liblogin.a
-rw-r--r-- 1 root root 842 2008-04-09 17:49 liblogin.la
-rw-r--r-- 1 root root 13268 2008-04-09 17:50 liblogin.so
-rw-r--r-- 1 root root 13268 2008-04-09 17:50 liblogin.so.2
-rw-r--r-- 1 root root 13268 2008-04-09 17:50 liblogin.so.2.0.22
-rw-r--r-- 1 root root 30016 2008-04-09 17:50 libntlm.a
-rw-r--r-- 1 root root 836 2008-04-09 17:49 libntlm.la
-rw-r--r-- 1 root root 29236 2008-04-09 17:50 libntlm.so
-rw-r--r-- 1 root root 29236 2008-04-09 17:50 libntlm.so.2
-rw-r--r-- 1 root root 29236 2008-04-09 17:50 libntlm.so.2.0.22
-rw-r--r-- 1 root root 13798 2008-04-09 17:50 libplain.a
-rw-r--r-- 1 root root 842 2008-04-09 17:49 libplain.la
-rw-r--r-- 1 root root 13396 2008-04-09 17:50 libplain.so
-rw-r--r-- 1 root root 13396 2008-04-09 17:50 libplain.so.2
-rw-r--r-- 1 root root 13396 2008-04-09 17:50 libplain.so.2.0.22
-rw-r--r-- 1 root root 22126 2008-04-09 17:50 libsasldb.a
-rw-r--r-- 1 root root 873 2008-04-09 17:49 libsasldb.la
-rw-r--r-- 1 root root 18080 2008-04-09 17:50 libsasldb.so
-rw-r--r-- 1 root root 18080 2008-04-09 17:50 libsasldb.so.2
-rw-r--r-- 1 root root 18080 2008-04-09 17:50 libsasldb.so.2.0.22
-rw-r----- 1 root root 701 2008-09-16 12:12 saslpasswd.conf
-rw-r----- 1 smmta smmsp 885 2008-09-16 12:12 Sendmail.conf

-- listing of /etc/postfix/sasl --
total 8
drwxr-xr-x 2 root root 112 2008-10-18 02:34 .
drwxr-xr-x 3 root root 448 2008-10-18 02:52 ..
-rw-r--r-- 1 root root 71 2008-10-18 02:34 OLDsmptd.conf
-rw-r--r-- 1 root root 68 2008-10-18 02:34 smtpd.conf


-- permissions for /etc/postfix/sasl_passwd --
-rw------- 1 root root 85 2008-10-17 16:36 /etc/postfix/sasl_passwd

-- permissions for /etc/postfix/sasl_passwd.db --
-rw------- 1 root root 12288 2008-10-17 16:36 /etc/postfix/sasl_passwd.db

/etc/postfix/sasl_passwd.db is up to date.

-- active services in /etc/postfix/master.cf --
# service type private unpriv chroot wakeup maxproc command + args
# (yes) (yes) (yes) (never) (100)
smtp inet n - - - - smtpd
-o content_filter=spamassassin:dummy
pickup fifo n - - 60 1 pickup
cleanup unix n - - - 0 cleanup
qmgr fifo n - n 300 1 qmgr
tlsmgr unix - - - 1000? 1 tlsmgr
rewrite unix - - - - - trivial-rewrite
bounce unix - - - - 0 bounce
defer unix - - - - 0 bounce
trace unix - - - - 0 bounce
verify unix - - - - 1 verify
flush unix n - - 1000? 0 flush
proxymap unix - - n - - proxymap
proxywrite unix - - n - 1 proxymap
smtp unix - - - - - smtp
relay unix - - - - - smtp
-o smtp_fallback_relay=
showq unix n - - - - showq
error unix - - - - - error
retry unix - - - - - error
discard unix - - - - - discard
local unix - n n - - local
virtual unix - n n - - virtual
lmtp unix - - - - - lmtp
anvil unix - - - - 1 anvil
scache unix - - - - 1 scache
maildrop unix - n n - - pipe
flags=DRhu user=vmail argv=/usr/bin/maildrop -d ${recipient}
uucp unix - n n - - pipe
flags=Fqhu user=uucp argv=uux -r -n -z -a$sender - $nexthop!rmail ($recipient)
ifmail unix - n n - - pipe
flags=F user=ftn argv=/usr/lib/ifmail/ifmail -r $nexthop ($recipient)
bsmtp unix - n n - - pipe
flags=Fq. user=bsmtp argv=/usr/lib/bsmtp/bsmtp -t$nexthop -f$sender $recipient
scalemail-backend unix - n n - 2 pipe
flags=R user=scalemail argv=/usr/lib/scalemail/bin/scalemail-store ${nexthop} ${user} ${extension}
mailman unix - n n - - pipe
flags=FR user=list argv=/usr/lib/mailman/bin/postfix-to-mailman.py
${nexthop} ${user}
spamassassin unix - n n - - pipe
user=spamd argv=/usr/bin/spamc -f -e /usr/sbin/sendmail -oi -f ${sender} ${recipient}

-- mechanisms on relay.******t.com --


-- end of saslfinger output --