Based on what i see in one of the comments in JIRA issue, i copied
%JBOSS_HOME%/lib/jaxb-api.jar to %JBOSS_HOME%\lib\endorsed. Restarted JBoss with Java 1.6.
This time it booted without any errors.
P.S: My sample application does not have webservices, so i am not sure if only this jar
needs to be copied. There might be other jars too, as mentioned in one of the comments at
http://jira.jboss.com/jira/browse/JBWS-1439
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