Greetings, since you already have the papers to the land that was sold to you by the Bank, you are the de-facto owner of the land. However, the claim of the Government has no standing as far as the facts that you have shared are concerned with. Therefore, you can approach the bank again stating that there will be legal action taken by you as the owner of the land against the seller since another person is seeking ownership. This will force the bank to take up action into the previous owner of the land and so on, so as to determine your position.
Under Section 55 of the Transfer of Property Act you have the following rights - The buyer is entitled— (a) where the ownership of the property has passed to him, to the benefit of any improvement in, or increase in value of, the property, and to the rents and profits thereof; (b) unless he has improperly declined to accept delivery of the property, to a charge on the property, as against the seller and all persons claiming under him, 2[* * *] to the extent of the seller’s interest in the property, for the amount of any purchase-money properly paid by the buyer in anticipation of the delivery and for interest on such amount; and, when he properly declines to accept the delivery, also for the earnest (if any) and for the costs (if any) awarded to him of a suit to compel specific performance of the contract or to obtain a decree for its rescission. An omission to make such disclosures as are mentioned in this section, paragraph (1), clause (a), and paragraph (5), clause (a), is fraudulent.
You may also refer to this link for more assistance https://www.lawyersclubindia.com/experts/rights-of-an-auction-purchase-under-sarfaesi--525156.asp
Hope this helps.
