Does these counts as valid observations?
Without going into details then yes, those are valid observations and concerns that should be raised, and probably tracked as issues.
But that doesn't mean those concerns should be fixed now or ever, your testing does not live in a vacuum and should take into account user expectations and their legacy code, the project's deadlines the effort the fix the problems and most important the harm if a user stumbles upon one of those issues.
I use the term issue since those are not necessarily bugs in the context of your project. You want to document your findings for future reference or improvement work, but you could use tasks, feature requests or something similar that will not increase bug count.
If you are worried then raise the question in a wider forum or to other managers, but be prepared to accept the same answer.
why would we text negative test cases, as the proper use case is already mentioned in the contract and lets blindly believe that users will follow it.
There is legacy behind this code, there is probably an obscure reason why it was built like that. You should continue testing trying to find real and important problems, while raising concerns on the way. Those concerns might add up building a "weight of the evidence" that eventually will lead to some action.
Project managers are fine with a casual low severity problem here and there, but if they find out over time that there's enough problems accumulated they might take action to fix them.