Setting autoflush on a filehandle from which you want to read is awfully curious, at best:

my $file = $cgi->param('file');

select((select($file), $|=1)[0]);
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Setting it for output here is curious too. If you're printing the file all in one chunk and closing it immediately, and if you're on a Unix platform, it's fairly meaningless code.

That's probably not the immediate problem. I seem to recall that my $fh = $cgi->upload( 'file' ) returns a more useful filehandle; does that solve the problem for you?