Dear Kumar,
While writing a post, one should be clear about what one is writing. There is no background information about your post. Neither you have disclosed about yourself.
Your post has just 26 words but in that also there is one major mistake. Your post should have read:
"I have issued offer letter to a candidate but the employee who has resigned has denied to leave the organization, plse tell me what to do in this case".
After submitting letter of resignation, employee may wish to withdraw it. Nevertheless, whether to accept the request for the withdrawal is the prerogative of the administration of the company. Secondly, you have written that "employee has denied to leave the organisation". Employee should have been thoughtful while resigning and moreover if he wishes to reverse his decision then he can make a request to withdraw resignation but cannot "deny" as such. Therefore, tell him to put up letter for the withdrawal of the letter of resignation and submit it to the approving authority. Communicate the decision of the approving authority.
By the way, just because resigning employee wanted to continue, and if you wish to accept his continuation then don't withdraw offer letter to the selected candidate. If you do so, it would be great injustice to him.
Lastly, let me reiterate requirement of writing clearly. This post is of professionals and mandates writing posts with utmost clarity and professionally.
Thanks,
Dinesh Divekar