Leave Entitlement During Notice Period
As per Section 79, Clause 1 and 1(i) of the Factories Act, 1948, if an employee has worked for a period of 240 days or more in a factory, they shall be allowed leave with wages. In the case of an adult, leave will be calculated at the rate of one day for every twenty days of work performed. There is no direct nexus between the notice period and leave falling in the employee's bucket. According to me, you are entitled to 1 day's leave if you have worked more than 20 days in a month during the notice period. (In your case, the total leave will become 11 days.)
The basic purpose of the notice period (for the employer) is to provide the organization with enough time to find a replacement, and the employee serving the notice period can train the replacement for that particular position. The notice period does not give rights to management to discriminate against employees and arbitrarily make policies that are against the basic rights of employees.
Organizations should not indulge in such practices. It's not only illegal and unethical, but it can lead to a culture where employees leave the organization without serving the notice period, and it can also hamper the organization's image. This will have a more devastating effect on the organization in the long run, and I think no management wants this.
For more information:
White Eagle: Leave Balance Issue