This is quite sensitive issue both for employee and employer. The employee has submitted the medical fitness certificate before induction to the company. in this aspect you can not call the fitness certificate wrong because you considered the document right on its place.
The action has to be taken as per standing policy of your company, provided having a fitness guidelines/yardstick for continuity of service.
On the first hand, which ground your company doctor declared the person unfit for work has to be ascertained clinically by a Govt. Surgeon. Therefore, the employee should be examined by a Govt Surgeon and to according to his direction. It has to determine by the Surgeon whether the person is completely unfit or fit for certain job that is existing in your establishment.
On second hand, Your company can consider someone from his family suitable for the job or can be terminated with compensation, if found unfit for any work or absence of further scope of employment.
To this query our senior members of this forum have supplemented their views for your guidance to choose your action.