Dear Raj,
Perfect advice by both the experts. If you want to retain the employee in spite of his attempt to cheat, you can act upon the advice of Mr. Pradip Shah.
However, I am also in favour of the second advice of Mr. Vasudevan. The question of oversight in mentioning one's name cannot arise. Did he continue to forget his name for the last 6 years and used to take his salary signing his wrong name for all that period? How he could not rectify his mistake for the last 6 years? Rather, if he was appointed on recommendation of another employee, the integrity of that employee can also be doubtful in helping him taking employment with fake name.
Besides, before terminating his services, don't forget to take his confession and an attested copy of his school certificate and also get his signature on that copy, so that in case he tries to drag you in a labour court you can prove his fraudulent intentions. If he can use his fake name for the past 6 years, the event of his using certificate of some other person with some other name can also not be overruled.