How to sort issues over authorship in my manuscript with PhD supervisor? After two years of extreme hard work I managed to finish my first manuscript. In my department there is a trend that if a professor has some collaboration with other people in any project then their name would appear in the publication originating from that collaboration... to which I totally agree, but the second part of this unsaid rule is that if no publication originated from this collaborative effort, then in that scenario the name of the collaborator still ends up in the publication from any other project of the same Professor.

So the problem here is that my supervisor has a collaborator who has nothing to do with my project but since he is a collaborator of my supervisor and their collaborative project was not fruitful, hence to appreciate the effort of this collaborator my supervisor is forcing me to put his name in my manuscript. Though I don't agree with this policy, I don't know how to solve this issue as I do not want to fight with my supervisor either nor do I want the name of this person on my manuscript. Please suggest what I could do in this situation?
It's unethical to include the name of a collaborator who contributed nothing to a particular paper as a co-author. However, as you said, it can be difficult to confront your advisor about including someone else as a co-author. 

If you are the person responsible for submitting the manuscript to the journal, one alternative you might have available is to ask your advisor is to have an explicit assignment of duties in the cover letter for your paper. ("Author A did activities Q, R, and S, while author B did T and U, etc.") The tasks of each author would be provided in such a manner—and in principle it would be hard to justify the inclusion of someone unqualified to be a co-author when you have to "certify" it to the journal, rather than just providing a generic statement of authorship.

If the advisor is unwilling to come up with such statements, then you could make the argument that since it's typically a requirement of journal submissions nowadays, that you're uncomfortable including an author whose contributions can't be clearly delineated.