Yeah it happens. They can deny it for a variety of reasons and it's not grievable. If they are denying it or stalling it for no reason whatsoever then you may be able to get the union involved. But even then, it's nearly impossible to get any help from the union moving the process forward. I've been there.
I imagine there is a variety of reasons, accidents, unsafe work practices with many disciplinary actions taken and low sick leave balance which seems to be a common reason although often that is just assuming or presuming there has been abuse of sick time. These are just a few reasons and I am sure there are many more.
As I understand the process, the only reason a postmaster can deny a transfer is if you are a disciplinary problem (by that I mean that you are belligerent and antagonistic towards management and your fellow workers). It has nothing to do with mistakes, safety issues, etc. The post office cannot control a persons life. If you wish to transfer they almost have to approve it. Skip the union, and go straight to your congressional reps. You will get a lot more action that way.