Marinate chicken with ginger-garlic paste and salt and set aside for one hour in the refrigerator. Grind cashewnuts with fennel seeds, cumin seeds and green chilllies with a little water.
Heat sufficient oil in a kadai and deep-fry capsicum roundels for half a minute. Remove and drain onto an absorbent paper and keep aside. Deep-fry potato roundels in medium hot oil till cooked and lightly browned. Drain onto an absorbent paper and keep aside. Heat two tablespoons of oil in a pan. Add bay leaf, cloves, peppercorns, ground cardamoms, cinnamon and fry for half a minute. Add chicken and stir-fry in the oil for two minutes.
Add boiled onion paste with cashewnut paste and mix well. Lower heat as the cashewnut paste may stick to the bottom of the pan. Cover pan and let chicken cook till almost done. Add coconut milk and bring to a boil and immediately remove from heat. Remove the chicken along with the gravy in a serving dish and garnish with fried capsicum and potato roundels.