A NDR is not generated when an email message is not delivered after you set the value for "Maximum number of recipients" of "Transport Settings" to 0 on an Exchange Server 2007 server

Symptoms

Consider the following scenario. You set the value for "Maximum number of recipients" in the "Transport Settings" to 0. You do this in Exchange Management Console on a Microsoft Exchange Server 2007 server. In this scenario, users cannot send email messages. Additionally, a Non Delivery Report (NDR) is not generated if someone tries to send an email message to one or more recipients.
 
Notes 
  • You expect a NDR to generate a 550 5.5.3 error message which indicates that there are too many recipients.
  • You can use the Set-TransportConfig cmdlet in Exchange Management Shell to set the MaxRecipientEnvelopeLimit parameter to 0. This setting restricts users to send email messages.

Cause

This issue occurs because a NDR message has a recipient that is blocked by the Exchange Server 2007 server. However, a NDR is a system message which should be delivered.

Resolution

To resolve this problem, install the following update rollup:
2279665 Description of Update Rollup 1 for Exchange Server 2007 Service Pack 3

Status

Microsoft has confirmed that this is a problem in the Microsoft products that are listed in the "Applies to" section.

More Information

For more information about the Set-TransportConfig cmdlet, visit the following Microsoft website:
General information about the Set-TransportConfig cmdlet