I have come across the same situation as yours.
If your are in tamilnadu there is a recent Circular by IG (registration) Circular no.67 dt 03.11.2011 which gives power to the District registrar himself to cancel the document, if it founds to be fraudulent in the enquiry. It not only cancels the fraudulent entry but also initiate criminal action against the person.
you can make use of that. Every District registrar office is empowered to this
I have got the order from the DRO against the fraudulent entry and got the registration cancelled