Puree onions (about 1 cup) and tomatoes with 8-10 soaked cashews (1 1/4 cups puree) separately.
When fairly hot, add the whole spices (1 large bay leaf, 2-3 cloves and 2 green cardamoms) and fry for a few seconds.
Stir in 11/4 cups tomato puree (pureed with 8-10 soaked cashews) along with spice powders – 1 tablespoon each coriander powder and crushed kasoori methi, 1 teaspoon each of Kashmiri red chili powder (or smoked paprika) and garam masala powder and ½ teaspoon each of haldi and black pepper powder.
Mix well and sauté on medium low heat, stirring continuously until you can see that most of the moisture is gone and the spices are well fried. You will start to see the oil starting to separate from the mixture.