Heat oil in a pan. Add peanuts and roast them for 3-4 minutes. Add Chana Dal and urad dal and saute for 2 minutes.
Then add garlic, green chili pepper and curry leaves. Saute until the garlic is lightly browned on the outside. Take off the heat.
Transfer to a blender. Add tamarind paste, salt and water to the blender.
Blend to a smooth paste. Remove in a bowl.
Heat oil in a small pan. Add mustard seeds and let them splutter. Add the urad dal, and let it turn golden. Then add hing, dry red chili and curry leaves. Saute for a minute until the curry leaves wilt.
Garnish the chutney with the tempering. Peanut Chutney is ready to be enjoyed.