I don't think its bending the rules. I am sure that applicant has other PIC time in a turbine aircraft. He/she might also have EFIS experience. Spicejet recently hired an expat (indian origin) Capt who was a BE-1900 Capt elsewhere. But he did have jet time from the IAF (Migs etc). He is doing 100 hrs of LFUS (line flying under supervision) before he is released as a Capt.
I believe the DGCA is permitting this as it seems more than one airline is doing this. In most other countries very often you upgrade on an aircraft you have never flown before. Its based on you seniority with the company and what A/C seat position you can hold based on your seniority and base. For example you may have been a B-777 F/O for an airline for 6 years. Then when your number for upgrade comes up, you find that in your base city you can "hold" only B-737NG Capt. At another base it may be another aircraft which you prefer, but you have to commute. You have to decide what is more suitable for you. Some stay in the RHS for better QOL. Others upgrade at the first opportunity.