To test it I added a user "kapilkarekar". Then I manually edited the files /etc/passwd and /etc/shadow. In these files I changed "kapilkarekar" to "kapil.karekar". It works !!
Try doing passwd kapil.karekar. It doesn't work. :-)
BTW which distro are you using? In RH 9 there is no /etc/sbin/adduser. There is a /usr/sbin/adduser which is a binary.