Heat up a fry pan over medium heat. Add the oil and when hot, sauté the onion until translucent. Remove from pan and transfer to a blender or food processor.
Add tomatoes, garlic, turmeric, cumin, sugar, ginger paste, coconut milk, water and blend smooth.
In the same pan you cooked the onion, add the chicken and brown all sides. This should take about 3 minutes.
Add the blender ingredients and bay leaves to the pan, bring to a simmer and cook until the chicken is white inside and the liquid is creamy. (15 to 20 minutes)
Remove the bay leaves and serve with white rice.