I can confirm that I tested more than two wallet creation and non of it asked for my password except that password i already entered while trying to access the app itself.
What other password did you expect to be asked for?
There's only one password in electrum. It's the one you are asked for right after opening the application and that's what OP is talking about.
So, what are my options here? How can I save the wallet file and then delete it so that I could generate a new one?
As I already said, you need to clear electrum data from your device and after that you will have to recover your wallet(s) from your seed phrase (or your private keys)
Your old wallet is encrypted and that's useless if you don't have the password.
Backup solutions available?
Your seed phrase acts as backup. Do you have it?
If you have the seed phrase or the old wallet is empty, there's nothing to worry about.
If you have funds in your old wallet and you don't have the seed phrase, you should try to remember your password before deleting your old wallet(s).
If you have funds in your old wallet, you don't have the seed phrase and you can't remember your password, you have already lost your funds.
This is because, for some weird reason, the Electrum development team decided to implement what's called a unified password in the mobile version of Electrum (since version 4.0.1, if I remember correctly).
It was 4.1.0