Found one solution through some guesswork and searching. From http://matthom.com/archive/2008/12/29/php-curl-disable-100-continue-expectation. The 100-continue status is "expected" by default when using cURL-
I disabled it using
And now it works! (I guess server stops sending the continue header). (However, I am not convinced this is robust for all types of requests that the client can make [in the long run] but might be okay for normal purpose).