You can do either.
The obvious advatage of using the existing 10.2 home is that :
1) You don't need to waste time upgrading10.1 to 10.2 when the 10.2 already exists
2) if you need to rollback the 10.1 home will already be there otherwise you will have to create backup for this.
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I have two oracle homes installed in a system those are 10201[ for 10.2.0.1 ] and other one is 10202 [ for 10.2.0.2 ].
Now I want to upgrade a database which in 10.2.0.1 to 10.2.0.2 .
In this case will I need to apply patch set on 10.2.0.1 and then go for database upgrade using catupgrd.sql
I just need to change the ORACLE_HOME in the env variable so that the database in 10.2.0.1 will point to 10.2.0.2 HOME and then i can start the
upgrade using catupgrd.sql.
If you already have both installed, why should you patch the first one ? Your best solution is your latter. Shut down (normal or immediate) your DB in 10.2.0.1 and start it in 10.2.0.2 with upgrade option.
Do you mean that you created directory for 10.2.0.2 or do you mean to say you installed software?
Refer to doc ID Doc ID 730365.1
For upgrade from 10.2.0.1 to 10.2.0.2, if you are doing interactive upgrade you will get following:
If you attempt to install this patch set in an Oracle home directory that does not contain an Oracle Database 10g release 10.2.0.1 installation, Oracle Universal Installer displays a warning dialog with the following error:
OUI-10091: There are no patches that need to be applied from the patchset Oracle Database 10g Release 2 Patch Set 1
It depends on your requirement. Like others have pointed out, you may choose either of the upgrade paths. Why was 10.2.0.2 home created separately? Is it housing another DB already? Is it for some business requirement. Depending on the answer, you may choose any of 2 paths.
Thanks For Your reply.....
The 10.2.0.2 home created separately because this home is hosting other Databases.
"if you need to rollback the 10.1 home will already be there otherwise you will have to create backup for this."
Hmm no, because you should have a backup anyway
Hmmm...how so? If you upgrade an existing 10.2.0.1 home to 10.2.0.2, how "would/should you have a backup anyway" if you don't back it up prior to the upgrade?