Modification of datasource XML placed in KARAF_HOME/deploy folder done while the Karaf instance is down is not detected on the first start of Karaf instance post modification. Karaf instance is taking the old database properties rather than the updated one. This is when the database properties are hard coded into the XML file. Behaviour defers when the database properties are configured using property place holders which is sourced from a properties file placed in KARAF_HOME/etc. While using properties place holders, Karaf is able to pick up the updated configuration.