AWS - rc.local is not run when /opt/aws/bin/cfn-init is present

I am launching an instance from AWS console from a pre-baked ami, by passing user-data, as

"UserData"         : { "Fn::Base64" : { "Fn::Join" : ["", [
      "#!/bin/bash -xe \n",
      "yum update -y aws-cfn-bootstrap\n",
      "yum-config-manager --enable epel\n",
     "/opt/aws/bin/cfn-init -v -s ", { "Ref" : "AWS::StackName" }, " -r Ec2Instance ",
     "      --region ", { "Ref" : "AWS::Region" },
     "      --configsets ", { "Ref" : "StackType" }, "\n",
  "yum-config-manager --disable epel\n",
  "sudo initctl stop newrelic-infra\n",
 "sudo initctl start newrelic-infra"
    ]]}}

I tried three things 1. Launched an ec2 with no user data - In this case rc.local is running 2. Launched ec2 with the above user data - In this case rc.local is not running 3. Launched ec2 with the above user data but with /opt/aws/cfn-init command removed - In this case as well rc.local is running

The question is why doesn't it run with /opt/aws/cfn-init and how to fix this.