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In older versions of the log manager the date rotation algorithm used only the system time. As of org.jboss.logmanager:jboss-logmanager:1.3.0.Final the last modified date is used as the initial time. JBoss AS 7 shipped with 1.2.2.GA. I haven't tested, but you should be able to replace the log manager with a newer version and it should work fine.
See https://issues.jboss.org/browse/LOGMGR-40 for more details on the issue.
James R. Perkins
I have updated the logmanager1.2.2.GA to jboss-logmanager-1.5.1.Final (latest version). I will check for next one week whether server.log is generating properly or not.
Thanks for your help.