In a frying pan dry roast the ginger, garlic, coriander seeds, cumin seeds, pepper corns, red chilies, cloves, cinnamon and grated coconut over very low heat for 5 minutes. Then add the onions and 1/2 cup of cashew nuts and roast for 10 more minutes by stirring constantly. Grind these roasted spices with 3/4 cup of water to make a very smooth paste.
Then grind another 1/4 cup of cashew nuts separately to a fine paste and keep it aside.
Heat oil in a large pan and add the ground spice paste and fry for 10 minutes over a low heat. Then add the ground cashew nuts paste and fry for 2 more minutes. Stir constantly. Add the chicken pieces and raise the heat to medium and fry for 5 minutes. Then add 3 cups of water. Cover the pan and lower the heat and cook for 10 minutes. Add the remaining cashew nuts and cook until the gravy is thick & dark and the chicken is fully cooked. Serve hot with plain rice or chapathi or naan.