Invalid byte 2 of 2-byte UTF-8 sequence exception whil

HI All
         I am using Xalan2.7.0 for transformation. I am getting a
"MalformedByteSequenceException:: Invalid byte 2 of 2-byte UTF-8 sequence"
exception while transforming a xml file. The encoding defined in input xml
is ISO-8859-1.  Complete stack trace is :::
javax.xml.transform.TransformerException:
org.apache.xerces.impl.io.MalformedByteSequenceException: Invalid byte 2 of
2-byte UTF-8 sequence.
            at
org.apache.xalan.transformer.TransformerImpl.fatalError(TransformerImpl.java
:781)
            at
org.apache.xalan.transformer.TransformerImpl.transform(TransformerImpl.java:
755)
            at
org.apache.xalan.transformer.TransformerImpl.transform(TransformerImpl.java:
1283)
            at
org.apache.xalan.transformer.TransformerImpl.transform(TransformerImpl.java:
1261)
            at
com.adeptia.indigo.services.mapping.MappingTransformation$1.run(MappingTrans
formation.java:535)
            at java.lang.Thread.run(Unknown Source)
Caused by: org.apache.xerces.impl.io.MalformedByteSequenceException: Invalid
byte 2 of 2-byte UTF-8 sequence.
            at org.apache.xerces.impl.io.UTF8Reader.invalidByte(Unknown
Source)
            at org.apache.xerces.impl.io.UTF8Reader.read(Unknown Source)
            at org.apache.xerces.impl.XMLEntityScanner.load(Unknown Source)
            at org.apache.xerces.impl.XMLEntityScanner.skipString(Unknown
Source)
            at
org.apache.xerces.impl.XMLVersionDetector.determineDocVersion(Unknown
Source)
            at org.apache.xerces.parsers.XML11Configuration.parse(Unknown
Source)
            at org.apache.xerces.parsers.XML11Configuration.parse(Unknown
Source)
            at org.apache.xerces.parsers.XMLParser.parse(Unknown Source)
            at org.apache.xerces.parsers.AbstractSAXParser.parse(Unknown
Source)
            at
org.apache.xml.dtm.ref.DTMManagerDefault.getDTM(DTMManagerDefault.java:437)
            at org.apache.xalan.transformer.TransformerImpl.transform

What can be the possible cause for this exception ?

Thanks & Regards
Pankaj