To avoid spammng we have disabled phpmail & sendmail option at server. So kindly configure your mail script to use SMTP instead of php_mail or sendmail.

Enabling relaying from locahost (phpmail & sendmail) would allow a spammer (taking up a hosting from any reseller) and write a simple script and spam with thousands of emails.
That would be a big trouble with blacklisting of ip.
So you see the potential risk?

This would occur even if you are innocent, but another client decided to spam. or say a website is hacked (free scripts often have security holes) and the hacker decided to use the website resources to spam.

We have agremments with major ISPs (like hotmail, yahoo, gmail etc) for our ips, based on which we agreed on some norms, one of which is disallowing relaying (without authentication) from localhost.

We believe it will be a greater trouble if you complain that emails are rejected by common ISPs mentioned above, and it costs us a lot to remove ips from being blacklisted by them (in repeated cased of spamming, this is not possible at all).

We have again enabled phpmail and sendmail options at servers so all the users are advised to prevent spams in their accounts otherwise account may be suspended.