Error because of override of owshiddenversion data

I am getting following error in ULS log while updating a PropertyBag value of a listitem in document library. It is being thrown from source - sharepoint foundation. I am using SharePoint 2010.

Did any one here have experienced this error and know reasons for it? Can this error fail the saving of property bag value for a list item?

Error 12/02/2014 12:38:08.50 CustomProcess.exe (0x21B4) 0x183C SharePoint Foundation General 8e2m High Error because of override of owshiddenversion data: list name = TestDocLib, item id = 2867

Please note, versioning is not enabled on document library.

Here is my code snippet which gives error - Error because of override of owshiddenversion data: list name = TestDocLib, item id = 2867

public void UpdateListItemProperty(SPListItem item, string propertyName, string propertyValue)
{
     SPSecurity.RunWithElevatedPrivileges(delegate()
            {
                item.Web.AllowUnsafeUpdates = true;

                if (item.Properties.Contains(propertyName))
                {
                    item.Properties[propertyName] = propertyValue;
                }
                else
                {
                    item.Properties.Add(propertyName, propertyValue);
                }
                item.SystemUpdate();

                item.Web.AllowUnsafeUpdates = false;

            });
}