Put the coriander seeds, cumin seeds, mustard seeds, cinnamon, cloves, peppercorns, nutmeg and red chili in a small frying pan. Place over a medium flame. Now quickly 'dry-roast' the spices, stirring them frequently until they emit a very pleasant 'roasted' aroma. Empty the spices into a clean coffee grinder or spice grinder and grind until fine. Put spiced in bowl. Put the coconut into the same frying pan and dry roast it over a medium flame, stirring all the time. The coconut should pick up lots of brown flecks and also smell roasted. Put the coconut in the bowl with the other dry roasted spices. Put the garlic, ginger, and green chili into the container of an electric blender, along with some water. Blend until you have a paste. Heat the oil in a 10-12 inch frying pan or saute pan over a medium high flame. When hot put in the onions. Stir and fry them until they pick up brown spots. Now pour in the garlic-ginger mixture and stir once. Turn heat to medium. Put in the chicken pieces, salt, as well as the spice coconut mixture in the bowl. Stir and fry the chicken for 3-4 minutes or until it loses its pinkness and turn heat to low, and cook for 25 to 30 minutes or until chicken is tender. Stir a few times during this cooking period, making sure that you turn over each piece of chicken so that it gets evenly colored.