So its resolved. Just wanted to leave this here in case anyone else stumbles upon a situation like this.

You can check https://community.atlassian.com/forums/Jira-questions/Assignee-set-to-unassigned-while-creating-ticket-through-the/qaq-p/1310631 for more details, but here's the basic:

Need to use 'assignee': {'id': JIRA_ASSIGNEE_ACCOUNT_ID}, instead of email. It needs the Jira Account ID of the user.

To get the account id:

1. Go to your Jira site.
2. Click on your profile picture.
3. Click on Profile.
4. Look at the URL in your browser's address bar. It will look like this: https://mycompanyname.atlassian.net/jira/people/123456:a1b2c3d4-e5f6-7890-g1h2-i3j4k5l6m7n8

"123456:a1b2c3d4-e5f6-7890-g1h2-i3j4k5l6m7n8" This is your account ID.