So answer for my query is, there is no one who applied and was under the same situation as I am. Whoever is replying are just like me goggling and getting info. Sometime, in hand experience is far better, non-ambiguous and complete than information in website or in the Internet, which I was looking for in this thread.
There is no point in arguing ... you guys assumed that the applicant (my wife) is an Indian passport holder. That is not the case. My case is for non-indian passport holder, who never held an Indian passport. They mentioned I need to submit original passport, but I wonder they hold it throughout the processing time (7-8 business days).
Anyway, thanks for those who helped by answering, providing suggestions, whatever that were, and finally trying to find out where I missed to read in IHC website. Wishing you all have a speedy PR process.