1. Cut the chicken on the bone and keep it aside. Slice 4 onions and deep fry them. Keep aside. Grate 4 onions, squeeze the juice out and keep both the grated onion and it's juice separately.
2. Cut the remaining 4 onions in half and keep aside.Peel the potatoes, cut them in cubes and keep aside.
3. Whisk the yoghurt.
4. Mix the coriander powder and chilli powder together with about a Tbsp of water and keep aside.
5. Heat oil in a heavy bottomed pan and add bay leaves, cinnamon, cardamoms, cloves, peppercorns and whole red chillies. Fry for about 30 seconds.
6. Add the grated onions (minus the juice) and garlic and fry till the raw smell goes away.After 30 seconds, add the ginger puree, chilli and coriander powder paste (in water) and stir continuously.
7. Add the chicken and fry for about 2 minutes.
8. Add potatoes and tomatoes, followed by the yoghurt and sugar. Cook for 10-12 minutes,stirring so that the spices do not stick to the bottom of the pan. Keep covering the pan intermittently so that the spices penetrate chicken. This is the most important step. Remember that spices should not stick to the bottom of the pan and when you are done, some oil will be visible in the masala. By this time Chicken would be half cooked as well.Now add the onion juice followed by the onion halves. Cover and cook on low fire till the chicken and potatoes are cooked through. Finally add garam masala and half the fried onions and mix well.
9. Garnish with the remaining fried onions and serve hot.