A bench of Chief Justice D Murugesan and Justice Rajiv Sahai Endlaw asked the Centre to set up the panel within three months and take a decision over the issue in nine months on a petition.
The petition filed by (Retd) Professor Dinanath Batra alleged that "the test of English Language comprehension skills adversely affects the Hindi and other regional language speaking candidates in taking the civil service exam."
"We dispose of this petition by directing the Union of India to, within three months, constitute appropriate committee, if not already in place, for examination of the questions raised by the petitioner and the representations of the petitioner...,in consultation with the UPSC, within nine months take a decision on the nature of the test of knowledge of English language in the Civil Services Examination.
"Whether it is to be only qualifying or competitive or mixture of both. We are confident that such committee, in its report will give reasons for its decision," the bench said.
The court recorded UPSC's submission that superior knowledge of English gives a cutting edge to the civil servants who have to deal with global affairs and which would be a reasonable classification.
The bench said, "Though we do not find any merit in the challenge, on the grounds urged, but we still find an element of arbitrariness, also within the domain of Article 14, in the decision of the respondents (UPSC and Centre) to effect the change impugned in this petition."
The bench relied on court rulings which had held that every educational institution has right to determine its method of education and conditions of examination; such are matters of policy to be formulated by the state and the courts are not the forum to adjudicate upon such questions.
"We, though not inclined to quash or interfere with the impugned change, are constrained to nevertheless observe that the respondents (govt and UPSC) need to re-look into the matter....." the court said.
Batra, in his petition, contended the new test deprived a majority of Indian citizens, having Hindi or other languages as the language of instruction during their education, of a level playing field in the competition.
The petitioner's counsel Jagdeep Dhankad and Monica Arora had argued that civil services aspirants till 2010 were required to answer two objective type question papers -- one for general knowledge and the other on a subject of their choice, in the annual preliminary examination.
The UPSC, however, introduced a new Aptitude Test paper worth 200 marks in 2011 containing an English Language Comprehension Skill section worth 22.50 marks, to be answered compulsorily by all candidates, the lawyer said.
"Hindi is the basis of Indian culture and making English compulsory will strike a body blow to wipe off India's rich cultural heritage from its roots. Hindi and other classical languages have to be given their rightful place in the educational system and in civil services," the petition said.
The petitioner also contended that the central government had not consulted various official committees on language, while implementing the new pattern.
Video: Kashmir's first Muslim woman cracks UPSC exam
Should a discredited CBI investigate the IB?
Drug patent row: HC to hear US co on Apr 12
FDI in retail: Why govt's policy is completely FLAWED
IAS candidate commits suicide after 'goof up' in UPSC results