Yeah, I noticed that the editor options for editor on - Course Category edit page & other pages are different.
On other pages, editor options have generally included these two options besides others required options -
'trusttext' => false,
'noclean' => true,
But, for Course Category edit page editor has options on
page - /course/classes/editcategory_form.php
/* some options have been removed from array intensionally*/
array(
'trusttext' => true,
);
So, trusttext => true & noclean is not set here.
On setting, trusttext => false & noclean=>true, works well for edit category page.
I am not sure if this is the only option.