Encumbrance in the property sold by bank through e-auction

This opinion is sought on behalf of a banker, recently a property was sold by a bank(XYZ) through e-auction to a party and Bank(ABC) granted loan on that property, later it was discovered that the defaulter of bank XYZ has fraudulently sold the property to a third party while the property was mortgaged at XYZ bank, the name of the third party is reflecting in the revenue records(mutation records). This fact of encumbrance was hidden by the bank while e auctioning the property, and the lawyer of the bank ABC also gave the opinion of clear title without checking the fact, as the property is mortgaged with ABC bank. Since the loan has been given by ABC bank and the mortgage has to be created in favour of ABC bank, kindly guide in this case on following matters 1. Will the bank ABC get clear charge over the property. 2. What is the process of cancelling the name of 3rd party from the revenue records or cancellation of the fraud sale deed. 3. Can bank XYZ sell the property through e auction. 4. Possibility of any objection raised by third party in future, their right on the property and if it happens who to be held responsible.