The even better news is that the original if condition can be much simplified and by combining the first 2 regexen it can avoid the fully empty pattern into the bargain:

if ($line =~ /$var1|$var2/i && $check =~ /YES/i) { print "Inside if\n"
+;}
else {print "Outside if\n";}
[download]

Of course if we still have $var1 = '' then it will still match but that's a question for KishKishore as to what they actually intend.