What is auction

I have sold 100 shares of BEL at 926 yesterday but i was not able to cover the positions due to certain issues. My broker says that it will go for an auction on wednesday. Can i get some details about this auction. Will i be losing a lot of money ? my broker has told me that it could be upto 20 percent i.e like 180 Rupees per share ... cant believe this :-( , can someone guide me on this

closing of BEL today is 921.

Thank you
The Stock Exchange is rigorous in the enforcement of its settlement schedules in terms of timely receipt of funds and securities as well as in the handling of short and bad deliveries. All short deliveries and unrectified bad deliveries of shares are put up for auction on the pay-out day. This is to ensure that the buying member receives the securities on the pay-out day. The Stock Exchange purchases the requisite quantity from the auction market and delivers them to the buying Trading Member. These stocks are bought at a higher price than the market price, and the price premium is borne by the seller for failure to deliver the shares.

If the shares cannot be bought in an auction, the transaction is deemed to be closed out at the higher price of the following: a price which is 20% higher than the last traded price of the scrip OR the highest traded price of the scrip on the NSE from the relevant trading period till the close out day.

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