If your home licence has a PIC rating for a 737 then you validation will say so. If you have a PIC rating and you have satisfied the company upgrade program then you should be able to fly PIC. The only thing the Indo DGCA stipulates is that you must have 250 hour "on type" for a validation. It doesn't specify which seat.
If they have rejected the upgrade then the guy should call his agency and unleash hell on them.
But as stated above its really at the whim of whoever you deal with at DGCA on the day.