hello and welcome to the forum,
i did a quick test trying to use your use-case, i could not reproduce the issue.
i used a aws s3 clone called wasabi and the bucket does not have s3:DeleteObject.
i was able to re-edit an existing file.
hard to know what is going on without a full debug log...
as a test, re-start the rclone serve webdav, re-edit that same text file, kill the webdav server.
that should create a small debug log, post that entire log.
another option, which will produce a larger debug log is to use
--dump=headers --retries=1 --low-level-retries=1 --log-level=DEBUG --log-file=rclone.log