The issue was fixed after moving all hosts to a new cluster.
1.Create a new vSAN cluster in the vCenter
2.Move all hosts from original cluster to the new cluster.
Refer KB389573, "Moving vSAN Hosts/Nodes from one cluster to another within the same vCenter"
3.Exit the Retreat Mode to check if the vCLS VMs were created.
4.Remove the old empty cluster, rename the new cluster to original name if necessary.
Moving vSAN Hosts/Nodes from one cluster to another within the same vCenter
https://knowledge.broadcom.com/external/article/389573/
Disable vCLS on a Cluster via Retreat Mode
https://knowledge.broadcom.com/external/article/316514/