Notice Period and Leave Adjustment
There is no hard and fast rule either way. You have to first of all see the purpose behind the notice period. It is the time provided for the organization to make alternate arrangements to tide over the imminent crisis of loss of manpower. As a general rule, no leave is sanctioned during the notice period. However, unavailed leave has to be paid by the company.
In certain cases, the organization does not prefer to see the employee anymore after submitting resignation. Therefore, they have been allowing leave or adjusting leave against the notice period. A long notice period like three months is unnecessary and gets adjusted to the extent of unavailed leave/compensatory off.