URI decoding in Nginx location block

Question

I have reverse proxy nginx setup with the configuration.

     upstream cluster {
        least_conn;
        server 192.168.4.137:8001;
        server 192.168.4.137:8002;
    }

    server {
        listen       8000;
        server_name  192.168.4.137;

        charset utf-8;
        log_not_found on;

        access_log  logs/host.access.log  main;
        error_log   logs/host.error.log;


        gzip            on;
        gzip_min_length 1000;
        gzip_proxied    expired no-cache no-store private auth;
        gzip_types      text/plain text/xml 
                        text/css 
                        text/comma-separated-values 
                        text/javascript 
                        application/javascript 
                        application/x-javascript 
                        application/atom+xml 
                        application/json 
                        application/x-json;


        location ~ \.(jpg|jpeg)$ {
            internal;
            root D:\\;
        }


        location / {
            proxy_pass http://192.168.4.137:8001;
            proxy_set_header        Host             $host:$server_port;
            proxy_set_header        X-Real-IP        $remote_addr;
            proxy_set_header        X-Forwarded-For  $proxy_add_x_forwarded_for;
            proxy_read_timeout 1800;
            proxy_connect_timeout 60;
        }

The location matcher for jpg /jpeg is internal redirect and can contain '%' in file names.

location ~ \.(jpg|jpeg)$ {
    internal;
    root D:\\;
 }

The '%' is getting decoded and hence 404 is thrown for the wrong names.

I have already tried:

1. using $request_uri in proxy pass
2. using rewrite (.+)%20(.+) "$1%20$2" in the location block

UPDATE 1: In reponse to the rest call, response is the file path with redirect header:

url = "\\Negative\\alcohol%20negative (10).jpeg"
response['X-Accel-Redirect'] = url

Error log generate in nginx is :

2018/06/16 18:28:45 [error] 15328#2636: *10 CreateFile() "D:\\Negative\alcohol negative (10).jpeg" failed (2: The system cannot find the file specified), client: 192.168.4.137, server: 192.168.4.137, request: "GET /rest/image/imagedata?id=3341869 HTTP/1.1", upstream: "http://192.168.4.137:8001/rest/image/imagedata?id=3341869", host: "192.168.4.137:8000", referrer: "http://192.168.4.137:4200/detail/3341869"

None of the above two methods have worked so far. Please suggest an alternative for the same.