After incorporating routing into carp1 device configuration fw2 booted with ARP entry for carp1.
I need to test it a little more but that could solve the case.
I don't know how it was working in 5.8.

Yes, that was it. Setting the routing in physical device configuration (vio1) to non-existant IP address caused the carp device on top to go into not properly configured device - the MASTER/SLAVE states were
running fine but the arp entry for CARP IP was not in the arp table.

Thank you guys for you time and effort helping me.

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