Xerces-C++ reports validation error with Docbook

Given following structure

<book>
<chapter> <title>This is chapter 1</title>
<sect1><title> This is section 1 of ch 1</title>
<para>
This is some text for section 1
</para>
</sect1>
<sect1><title>This is section 2 of ch 1</title>
<para>
This is some text for section 2
</para>
</sect1>
</chapter>
</book>

Redenering command:
Xalan testfile docbook-xsl-1.49/html/docbook.xsl

XalanC1.3 incorrectly renders this as

1. This is chapter 1
1.1 This is section 1 of chapter 1
1.2 This is section 2 of chapter 1

This is some text for section 1

This is some text for section 2

Expected output
1. This is chapter 1
1.1 This is section 1 of chapter 1
1.2 This is section 2 of chapter 1

1. This is chapter 1
1.1 This is section 1 of chapter 1
This is some text for section 1

1.2 This is section 2 of chapter 1
This is some text for section 2

This later version is the version output by XalanJ, XSLT etc. It is also
the version which I get when I run with stylesheet versions 1.48 or earlier