I am taking a text file from user and then posting that file back to the browser using ajax storing the content in db and then showing the content back to user page using Jquery post response. Now i want to something like this..
Can't be done in pure JS for security reasons. You would need to have the user upload the file to your server, and fetch the contents back through Ajax.
If you use Flash or Java, you should be able to gain direct access to the file. If you speak Flash/Actionsript, maybe SWFUpload's source code (especially the new client-side resizing functions) can serve as an inspiration.
Update: This blog entry should help. Read and write local files with Flash Player 10
If you're ok with Firefox 3.6 support only check out https://developer.mozilla.org/en/Using_files_from_web_applications, otherwise you should use Flash, Java or silverlight for this.
You won't be able to read a file in user's computer due to security issues.