To understand the problem we have to read the definition of continuous service in section 2A of the PGA
An employee shall be said to be in continuous service for a period if he has, for that period, been in uninterrupted service, including service which may be interrupted on account of sickness, accident, leave, absence from duty without leave (not being absence in respect of which an order treating the absence as break in service has been passed in accordance with the standing orders, rules or regulations governing the employees of the establishment), lay-off, strike or a lock-out or cessation of work not due to any fault of the employee, whether such uninterrupted or interrupted service was rendered before or after the commencement of this Act;
In the facts of the case mentioned by you it appears that the employee is on unpaid leave but with an approval and no such order has been passed treating this period as unauthorised absence. Hence the period is to be counted in reckoning the sevice of 5 years eligibility.