The body was handed over to the family without any written instructions and, more crucially, the dead and alive children were not kept separately.
New Delhi police are continuing to review hospital records as well as video footage from the twins' birth to better understand how the doctor's arrived at the conclusion.
A three-member panel formed by the Delhi government also found Max Hospital guilty of not following prescribed medical norms in dealing with newborn infants.
On Sunday, Delhi chief minister Arvind Kejriwal said there should be a legal framework to check "open loot" and "criminal negligence" by private hospitals, in the wake of the premature baby being wrongly declared dead by a city-based private hospital.
As the news came up on several media channels, the Max Hospital terminated the services of the involved doctors.
The inquiry found out that the hospital authorities didn't do an ECG, to find if the babies were dead. The family was taking the twins for last rites at the time.
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Delhi Health Minister had on December 2 said that if the hospital was found guilty of medical negligence in its probe, it's licence could be cancelled.
An Indian hospital fired two doctors after a baby they pronounced dead woke up on the way to his own funeral.
The infant, the family fondly called "Champ", was admitted in Aggarwal Nursing Home in Pitampura on November 29 after the family realised he was alive. The other baby was stillborn.
"We are shaken and concerned at this rare incident", the hospital said in a statement.
The panel in its findings discovered that the doctors at the Max Hospital in Shalimar Bagh had not conducted any ECG tests to to trace whether the child was alive.