Got it figured out.
1. Update settings.db using adb shell
shell@msm8974:/ $ su
shell@msm8974:/ # sqlite3 /data/data/com.android.providers.settings/databases/settings.db
sqlite3> update secure set value=1 where name='lockscreen.disabled';
sqlite3> .quit
2. Move or delete locksettings files
shell@msm8974:/ # mkdir /data/system/lock
shell@msm8974:/ # mv /data/system/locksettings* lock
adb reboot
and good to go.