project Avatar: Trying to create a project with custom avatar and custom permission scheme give java.lang.IllegalStateException error

REQ: Sys admin trying to create a project for XYZ project manager and there a permission scheme ABC for same
Steps:
1. On the administration tab, click "Add Project". Specify project name.
2. Choose a custom avatar for the project.
3. Specify the lead as XYZ and choose the permission scheme as ABC.
4. Click "Add"

Result
1. JIRA fails with stack trace..."java.lang.IllegalStateException: You can not update a project with an invalid validation result.
at com.atlassian.jira.bc.project.DefaultProjectService.updateProject(DefaultProjectService.java:218)"
2. Detail stack trace is attached.
3. If user browse the project, the project is created with default avatar.
4. This error is happening due to issue JRA-16515.

Expected:
1. No Error message, the project should get created with custom avatar.