Thanks a lot people for your help!
The issue is no doubt located under the top plate above the take up spool. The reason why I am so sure is that when the film is loaded and I engage the release lever on the front, it rewinds smoothly in the beginning, which means that the rewind lever and the release lever is working fine, but when the film reaches the end or perhaps somewhere around the middle - i.e. the take up spool begins to turn, it starts to get really tough.
I have decided to send it to Leica in Solms for a CLA.