Dry roast urad dal, chana dal and red chili until golden. Add cumin and toss. Set these aside to cool.
Add oil to the pan and saute onions, garlic and capsicum until the raw smell of capsicums goes away completely.
If the capsicum is not sauteed well, the flavor of the chutney will not be good. If using tomatoes, you can add it now and cook till the tomatoes turn mushy. Cool these as well.
Powder the dals first and then add capsicum, onions, tomatoes or lemon juice.
Blend until smooth. If needed add 2 tbsps of water. Taste and adjust salt and sour tastes.
Heat oil in a pan, add mustard when it splutters add red chili, curry leaves and hing.
Pour this to the capsicum chutney.
Rinse and chop capsicum to cubes, slit green chilies
Fry chana dal to golden set this aside to cool, skip this step if using fried gram.
Fry chilies, if using green chilies, you can use raw.
Fry capsicums in the same pan till slightly soft, do not overcook or over fry. Once you begin to smell the capsicums well, switch off. Add cumin to the hot capsicum. Cool this completely.
Add all the ingredients, add water little by little as needed and grind to a smooth chutney
If desired it can be tempered with mustard, cumin, hing, red chilies and curry leaves.
Serve capsicum chutney as desired.