Heat 3 tablespoons of oil in a heavy-bottomed skillet or wok on medium heat.
When hot, add the green chili until it begins to brown, about 30 seconds.
Now add in the cumin seeds. When they start to splutter, add the bay leaves and cinnamon stick, stir for about 30 seconds.
Now, add the onions. Sauté until almost golden. About 6-7 minutes.
Add the tomatoes and sauté for 4-5 minutes until the tomatoes are well blended.
Next, add the ginger-garlic paste, turmeric, red chili powder, and cumin powder.
Sauté for another 5 minutes until you see the oil surface.
Add the ground cashew nuts and garam masala. Sauté for about 2 minutes.
Now, add the sliced mushroom. Stir gently and well until the mushrooms are nicely coated and the oil starts to surface, approximately 5 minutes.
Add the cup of hot water or broth. Stir. Let cook for 10 minutes, stirring occasionally.
Turn off the heat. Sprinkle one tablespoon of chopped cilantro. Stir and let sit for 5 minutes. Pour into a serving dish.
Garnish with remaining cilantro.
Serve with any style of rice or roti—pairs well with other flat breads like naan, paratha, or pita.