Chasing 171 for victory, England crumbled to 80 all out, their lowest Twenty20 total condemning the defending champions to their heaviest loss in the shortest form of the game.
Rohit Sharma's unbeaten 55 off 33 balls fired India to an imposing total of 170 for four before man-of-the-match Harbhajan took four for 12 on his return to the side and Chawla two for 13.
Harbhajan was naturally ecstatic about his international comeback after more than a year.
"It's been a hard year being out of the side," an emotional Harbhajan said. "The other boys [fellow spin bowlers Ravichandran Ashwin and Pragyan Ojha] were doing really well, so it was really difficult for me to make a comeback.
"For me this was an important game. Getting a wicket off the second ball gave me a lot of confidence.
"This India shirt is everything for me. I don't know what I would do if not playing for India."
Both teams had already qualified for the Super Eight stage by beating Afghanistan but England's feeble capitulation will be a major concern for the defending champions heading into the next phase of the tournament.
"It was poor all round," Stuart Broad, the England captain, said in a televised interview. "We were pretty happy with 170 but we didn't get it right with the bat at all and India got it very right.
"We played across the line a bit too much whereas against Afghanistan we struck the ball very straight. I don't agree we can't play spin. Certainly in training we have been learning.
"We have had a very bad day, but that does not affect the rest of the tournament. It does not change where we go."
India lost the early wicket of Irfan Pathan after being put into bat but Gautam Gambir made 45 and Virat Kohli 40 in a fluent second-wicket partnership of 57.
Kohli was caught in the deep by Jonny Bairstow off Graeme Swann, the off-spinner, but Rohit settled in quickly, hitting the only six of the innings and five fours as the England fast bowlers struggled to get much out of a placid pitch.
Craig Kieswetter smashed two huge sixes to get England off to a decent start but Irfan removed Alex Hales and Luke Wright before the Indian spinners took charge.
England collapsed from 39 for two to 60 for nine and when Kieswetter edged Chawla to Kohli at slip for 35 their last chance had disappeared. "The response from the spinners was brilliant," said MS Dhoni, the India captain.
"We thought 'let's go back to what our strengths are', gave both our spinners a fair chance and now we've got a [selection] problem as they both played well."
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