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Good day Vivek, and I appreciate the clear explanation of your concern.
Based on the non-delivery report showing “550 5.7.1 TRANSPORT.RULES.RejectMessage; the message was rejected by organization policy”, the email is being blocked by a policy configured in Exchange Online by your organization's IT admin.
To move forward, I recommend contact your organization's IT administrator and ask them to:
Note: In case you do not know who is your IT admin, kindly refer to this article: How do I find my Microsoft 365 admin? - Microsoft Support
Review the mail flow rules configured in Exchange admin center.
Run a message trace for the affected email to identify which rule caused the rejection.
Update the rule or add an exception if the external recipients should be allowed.
Since the restriction is enforced by your organization's Exchange Online policy, only an administrator with the appropriate permissions can review and modify the configuration. As a forum user, I don't have the permissions or tools needed to modify your organization's configuration.
I hope this helps clarify the cause of the issue. If you have any questions or need further support, please don’t hesitate to reach out at any time.
Thank you for your patience and understanding.
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