Only a single active version is allowed

Dear DMS Experts,

While trying to create a new version of a DIR, I am getting the error " Only a single working version allowed" and not able to create a new version.

In DC10, the Version assignment checkbox is ticked, and also the version number increment is given as 1. But still I am unable to create a new version.

Is there any other configuration required?

Thanks and Regards,

Aravind