Hello Wajid,
this is working as expected and as defined in the RFC5321, section 6.1:
If there is a delivery failure after acceptance of a message, the
receiver-SMTP MUST formulate and mail a notification message. This
notification MUST be sent using a null ("<>") reverse-path in the
envelope.
So an empty envelope sender address must be used when issuing a Non-Delivery Report (NDR). However *why* such an NDR is generated, will depend on why the delivery failed. This could vary from invalid recipient address over destinations not being reachable to being blocked for policy respons on the destination end. The NDR itself will contain details on why the delivery failed.
Best regards,
Martin