Understanding Earned Leave
The leave you've mentioned is called Earned Leave, Annual Leave With Wages, or Privilege Leave, depending on the nomenclature used by the concerned establishment-specific Labour Law. Simply put, it is a leave earned by the employee by working a minimum number of days in a given period to avail it during the succeeding period, subject to prior sanction by the employer. If not availed, it can be accumulated up to a certain ceiling. The calculation of such leave and the employee's right to claim it are conditioned by the number of days worked by the employee in the establishment.
As you mentioned, the rate of calculation of such leave is one day for every 20 days worked. The employee becomes entitled to it only in the years following the completion of the first year of service in the establishment.
Understanding Continuous Service
As you already know, "continuous service" in a year generally means uninterrupted service of 240 days in the preceding 12 calendar months, including interruptions of weekly holidays, authorized leave, sickness absence, employment accidents, legal strikes, lockouts, layoffs, or work cessation not due to the employee's fault. In the words of the higher judiciary, it does not mean only the days the employee works with pen or hammer and sickle and being paid for it. If you divide the 240 days by 12, you get 20 days per month.
It is important to bear in mind that only for the purpose of the computation of the actual period of continuous service, the permissible interruptions should be taken into account and not for the calculation of earned leave. In other words, the days of permissible interruptions would only determine the eligibility criterion, but not the number of days of leave.