@user191239281, thanks very much for your suggestions. I did a lot more testing and have come to the conclusion that I may be trying to flog a dying horse here!
I tried the same video on a i7 CPU box and it ran flawlessly. The CPU of the box having the issue is a Pentium Duo which is pretty old and I guess I should be happy that I can run a normal HD video let alone a 4k UHD video!
I ran the video on VLC and checked the performance of of the GPU using nVidia Setting Manager tool and it tells me that the GPU utilisation is around 20% but when I checked the system performance it shows CPU utilisation of around 180% just for the VLC process! So this clearly means that CPU is able to handle this file effectively. If I run a normal HD file (whether mp4 or mkv) CPU utilisation hovers around 100% for the VLC process which means it is just able to cope with it.
I have another related issue. When I check the status of the nVidia card when running VLC, the tool nvidia-smi claims that there are no processes utilising the GPU whereas the nvidia-settings-manager shows GPU utilisation changing correspondingly.
Have you got any idea why nvidia-smi claims that no processes are running?
I also did further testing by turning off VSync. The basis for this was, I noted that if I turn off VSync, glxgears shows a far higher fps rate. So with VSync turned off, now I can get vlc running at a far more civilised way - at 20-30% CPU utilisation and without stop start display. However, I do get occasional vertical ripple effect. Also, I still cannot get a 4K UHD 60 fps video to play - not that I have a need to play videos of such quality but just trying to see how are I can push my CPU/GPU combo.