However, is it (islamically) right to reject a proposal based on assumptions determined by one bad past experience and to generalize it to all? Kindly let me know what is the ruling in Islam about such matters.

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No it isnt Islam always wants peace and harmony between people and therefore one has to have husne zann (good opinion) about his fellow Muslims.
one past mistake done will not mean they haven't repented. Benefit of doubt has to be given until there is some kind of proof.