I was able to resolve this issue by removing intel grahics installer.
Here are the steps I followed:

1) In additional drivers, select nouveau as default driver.

2) Purge nvidia using following command:
sudo apt-get purge nvidia*

3) Completely remove intel graphics installer and files instaleld by it
using following guide:

http://theclonker.de/?p=89

replace quantal with trusty.

4) When you purge intel driver i915*, on next reboot an older version
might get activated so remove it as well. Simply install synaptic and
search "i915" and uninstall if any old version is activated. Restart
after that.

5) Enable nvidia driver again in additional drivers. It should work
fine!

Now I am using xorg edgers repository and have installed nvidia 340.58
driver. It performs much better than nvidia 331 so I will highly
recommend it.

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https://bugs.launchpad.net/bugs/1369216

Title:
  gpu-manager: /etc/modprobe.d is not a file

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