Bank can sue both seller and buyer 

if loan has been sanctioned on basis of fraudulent documents 

2) there may be collusion on part of parties to defraud the bank 

- If the bank has already sanctioned the loan , and the buyer and seller have submitted their agreement to sell prior to the registration of sale deed , then both i.e. seller and buyer is liable , in case of fraudulent.

- However, if the seller has submitted the fake documents before the bank for getting loan sanctioned after keeping the buyer in dark  then sell is liable for the said fraudulent and bank can lodge a compliant against the seller only. 

In my view NO

How can the buyer be held liable if the seller's documents are not genuine?

In fact the bank ought to have done it's own due diligence before granting loan to the buyer 

If the seller's loan is not fully repaid or foreclosed then it means that the original documents will be with the seller's bank and not with the seller 

1. If the flat was earlier mortgaged with the Bank of the seller then the buyer's should have asked for the title deed from the seller's bank before sanctioning the loan to the Borrower.

2. If the title deed is found to be fake, then it is a criminal act for which police complaint alleging fraud shall have to be registered by the person who has deposited the said fake deed with the Bank.

3.The buyer's bank shall have to write to the seller's bank seeking custody of the original title deed if the same has not yet been taken away by the seller after repaying his outstanding amount.

Your question is lacking details.

However it is presumably  understood that whether the bank will hold the buyer liable for the balance amount to be paid by the seller towards the pending loan?

Or is it that seller's documents are not genuine?

To the second question, since the seller would be clearing all his loan dues by discharging the entire loan amount, the buyer cannot be held liable for any dues to be paid by the previous borrower/seller.

Even otherwise  the buyer cannot be held liable for a third party's fault.

The buyer can refuse to pay any amount that is pending to be received from the seller to the bank.

If you want more clarification, you may revert wit more details.

Dear sir/madam,

yes they can do it. Since the contract is based on trust and at any stage if it is found that the contact has been unlawfully created, it can lead to breach of contract and the borrower can be sued for criminal breach of trust, fraud etc. 

For any unpaid amount of loan the bank can proceed against the property. it doe snot make any change whether the borrower had sold this property to someone else or not. 

Only if he is responsible intentionally otherwise no