He said he had invited both women to spend the day with him on learning Ms Dookhran planned to run away following a family dispute.
Arshid said he took them in his pick-up truck to the six-bedroom renovation project in Kingston, south-west London.
He told jurors he left the unidentified woman in a bedroom with a vibrator and returned to find her undressed from the waist down and using it.
He said: I then go and sit on the bed with her and we start making out, kissing and fondling. And we had sex.
Afterwards, Arshid said Ms Dookhran, who was downstairs in the kitchen, told him she was tired and went upstairs.
He said he carried on with his work before coming across his niece sobbing that her whole family hate her.
He told jurors he tried to reassure her, saying: I was comforting the girl, innit.
He went on: You know what? For the first time in a while I made her feel safe. I know in the grand scheme of things how things turned out.
She felt safe and comfortable, and then she kissed me. It was a very emotional situation. We act first, and think later.
Judith Khan QC, defending, asked: What happened once you have slept together?
He said: As we were getting dressed, (the other woman) burst in and shes going crazy. I cannot tell you how angry she was.
(She) is incredibly possessive and she obviously heard what was going on upstairs, and she came in screaming at me. She punched me in the chest. She shouted at me. Celine started crying.
I dont deal very well with women shouting both sides at me. I tried to calm the situation down. She were having none of it (sic).
Arshid said he left them to it and called his mother before returning after about 20 minutes.
Describing the scene, he said: As I got to the top of the stairs I looked across. I saw (the woman) standing there, knife in hand, blood on her hands.
I went running in. I see Celine in the bath. Theres so much blood everywhere, I cannot see whats what. It was obvious she was gone, so I closed her eyes.
Arshid allegedly screamed at the other woman and demanded to know what she had done, adding: It was so weird, my mind is all over the place. I said get out of my sight.
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