Ever since Sukhjinder Singh and Sandy Kaur took over Diamond restaurant in Clifton Hill last year, their new signage has been confounding people in the neighbourhood. The awning over the modest shopfront reads: Indian & Hungarian Cuisine. "Everyone always asks, 'Why Indian and Hungarian food?'" Kaur says. "You see restaurants that are Indian and Malaysian, or Indian and Chinese. Why not Indian and Hungarian? Why is it weird?"

The evolution of the idea, however, is more complex than Kaur's simple "why not?" Both Singh and Kaur are from the Punjab region of India, but both have worked primarily in Hungarian restaurants since moving to Australia. Singh has travelled in Hungary, and learned much of what he knows about cooking from Hungarian chefs. "So when we felt that it was time to open our own restaurant, we thought, 'Why not do both?'" Kaur says.

The result is not fusion. Diamond has both an Indian menu and a Hungarian menu, and there is no crossover. The Indian menu is much larger, and has all the standard dishes popular with Australian diners. But the real gems are dishes specific to the owners' home region, particularly the goat curry, which is complex and fragrant. Fish is also a strong point – the Punjabi fish tikka entree, rife with ginger and garlic, is downright elegant.

The Hungarian side of the menu is pure comfort, with classics such as beef goulash and sztrapaska, wiggly little dumplings similar to spaetzle. There's a long list of chicken schnitzels, which come in a variety of international outfits: the Mexican schnitzel comes with hot salsa, guacamole and sour cream, while the Canadian version is topped with barbecue sauce, smoked bacon and mozzarella cheese. The jagger schnitzel, covered in mushroom gravy, feels like a classic pub meal, especially thanks to the hot chips that come alongside.

Regardless of which side of the menu you order from, dessert is a clear choice: fresh hot Hungarian doughnuts, showered in powdered sugar and dolloped with the jam of your choice.

While the restaurant's take-out business is brisk, it's worth coming in for the full sit-down experience. The brick walls and white tablecloths give the room an air of sophistication, and the service is gracious and direct.

Which part of the menu has the clientele most responded to? "Both," says Kaur. "Some people come in for goulash, and some come in for the Punjabi specialties. Most tables have both; both are doing well." They've even found their perfect customers. "We had a married couple come in, one of them is Indian and one is Hungarian. They were so happy! They said this is the best place for them."

Must order dishes Goat curry; Hungarian doughnuts.