The update(PUT) API call for file sizes under 22MB works through. But for bigger file sizes (such a 40MB), the update rest endpoint of Github fails with a 500 internal server exception.

Not sure whats happening here. Size of the test file is greater than 10 megs, so hosted payload could be found here : https://nofile.io/f/0gampnACOOE/testAPILargeFile_base64.txt