In case your Intraday Equity short position is not squared off due to the absence of buyers or failed due to any reasons. This will be considered as short delivery, which means the seller of the shares has defaulted on the settlement of shares hence the exchange participate in auction market on T+2 days. The exchange holds an auction for the same quantity of shares & delivers it to the buyer.
The settlement of the auction shall be done on T+3 day (where T is the transaction day, holidays is not included).
Short delivery can happen in stocks with less liquidity or if an Intraday Equity position hasn’t been squared off in some circumstances. As a result, appropriate margins would be blocked in your account. The blocked amount will be released once the auction settlement process is completed on T+3.
In the above case, you will be notified via SMS and email. For more details about short delivery refer to this blog post – What Is Short Delivery & How It Works?