Thanks that helps. Yes - the code was setting errorStat flag to true in the catch block. The piece that I was missing - was putting debugLog in the true sequence - which when put generated below logs under Server Log section (with retyCounter as fetched from getRetryCount flow service printed too) - stressing system was retrying (NB: I changed retry counter to 2 here to avoid ID be locked).
Server Log Entries as of 2018-09-19 18:56:45 CDT
[249]2018-09-19 18:55:53 CDT [ISP.0090.0003C] Entering Retry Block, with current retry count as 2***
[248]2018-09-19 18:55:52 CDT [ISP.0090.0003C] Entering Retry Block, with current retry count as 1***
[247]2018-09-19 18:55:50 CDT [ISP.0090.0003C] Entering Retry Block, with current retry count as 0***
#Integration-Server-and-ESB#webMethods