No its not sorted yet. I am still trying to figure out the problem. But yes, its not from your plugin for sure. If you have any pointers, please let me know.
You are right. After posting this question, I disabled the REST plugin and tried again. It still gave the error. My WP has many plugins and before installing yours, I installed https://github.com/WP-API/Basic-Auth And I also has Wordfence Security. I tried disabling both but still no luck. This does not happen with admin user. Just normal users get this error. I disabled all three plugins and tried but no luck. Thanks for looking into it. I really need to get this work for normal users so I can develop a mobile app to give them access to the site.