Thanks Steve,
But we have configured same group policy for all machines and that too this poping up randomly and machines getting affected doesn't points gpo being a problem.
We have now tried changing External communication settings to change from "Do not use a proxy server" to "use the proxy server specified by the client browser" for the group in sepm for the affected branch(not all systems in a branch are affected).
After changing this, we have taken the affected machine of that branch and given "update policy". After that, the greyed out option is gone and got enabled. Even the message "some settings are managed by your system administrator" also went away.
We are now not sure what is the root cause as there are some groups in which External communication settings are already set to "use the proxy server specified by the client browser" but still the issue is coming but while either after some time or after taking the machine remotely and giving "update policy", the issue is getting resolved.
Request your support.
Regards,
Anishk