Heat oil in a pan and saute curry leaves & sliced small onion. After a few minutes add dried red chilli, whole coriander, fennel seeds,ginger and garlic. When it is fried well, add grated coconut, mix well. Fry it till the coconut becomes golden brown. Let it cool for sometime. Add enough water to the cooled coconut mixture and grind to a smooth paste.
Heat oil in a pan and add thinly sliced onion and green chili. When onion is fried well (golden brown colour), add turmeric powder and salt & stir for a few minutes. Add tomato and cook. When tomato becomes soft add the ground paste to this and mix well. Add 2-3 tbsp of water and mix well. Add cleaned chicken pieces to this, combine well and add hot water for the chicken to cook. Cover and cook in low flame and stir in between and cook till the chicken is done.
Meanwhile heat oil in another pan and add thinly sliced small onion(4) and curry leaves. Add chili powder to this and fry well. Add this to the cooked chicken and mix well. Serve hot with ghee rice, plain rice or roti.