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Dr Jacob Mathew, HoD of Orthopaedics, called the patient's allegation that the rod meant for the leg was used for the forearm baseless and unscientific.
The youth's family filed a complaint against the doctor.
The action was taken on the basis of a report filed by the Directorate of Medical Education.
The girl, who has polydactyly condition, was admitted to the hospital for the removal of the additional finger on her hand.
The fundraising campaign will begin on May 15.
The Commission had taken suo moto cognizance of the alleged medical negligence death of Shibina on April 29.
Dr A Abdul Salam submitted his resignation to the principal of the college.
Shibina was admitted to the hospital on March 21 for delivery and gave birth to a baby girl on March 26.
The deceased is Shibina (31), wife of Ansar, native of Karoor, in Purakkad panchayat.
It is alleged that Bindu and her husband K T Gireesh lost their first child as the taluk hospital turned away the woman in labour pain.