Chrome_settings_overrides manifest values not working properly during update of extension. Work fine during fresh install

I am adding a search provider to my extension as a new feature. So, in the next upgrade of extension a new default search engine would be added to browser. But extensions stops working in unexpected ways.
This is what I want to add at minimal.

“chrome_settings_overrides”: {
“homepage”: “https://www.mynewhomepage.com”,
“search_provider”: {
“name”: “My Websearch”,
“search_url”: “https://www.mywebsearch.com/q={searchTerms}”,
“is_default”: true
}
}

  1. If I specify “homepage” upon upgrade the extension popup does not appear, and options page does not work. If I disable and enable the extension it works normally except is default" state does not get set

  2. The options and popup pages appears upon upgrade if “homepage” line is not there, but is default" state does not get set.

It is as if not all manifest keys are parsed upon upgrade. Any one has any ideas? Anyone from Mozilla here?