First, grind the small onions in a mixer or a hand blender.
And then add tomatoes, and grind them too.
In a kadai, heat the oil and add urad dal. Once it changes color, add mustard seeds and let them splutter. Add the curry leaves.
Once the curry leaves are roasted, add the ground onion+tomato. Add the chilli powder and salt and mix well.
Cook in high flame for 10 minutes and then simmer for another 10 minutes. When all the tomato juice is gone and when the oil separates, the chutney is ready.
Switch off the flame and let the chutney cool for a while. Serve with hot idlies or dosas.