Your wording of the question give me great cause for pause:
First of all, there are actually three principles invoved in a Shortsale; the Buyer, the Seller (Homeowner) and the Bank (the actual Seller).
Secondly, you refer to the "Approval Date"; which to my mind is the date that you specified for the Bank to get back to you on your Offer.
Thirdly, you say "is the contract automatically cancelled" acknowledging that you have a CONTRACT.
I can only guess at what is happening here:
You made an offer, the Sellers approved it, and it was forwarded to the Bank. The Bank has not responded and you believe that the Seller's approval created a Contract for you.
My main reason for believing this, is that if you really had a CONTRACT with the Bank, the Bank would not be ignoring you.
I am further guessing that the Bank could still get back to you with an answer.
Have you, or your Agent, contacted the Listing Agent for his interpretation?
Good luck and may God bless