Drain and rinse and grind the soaked khuskhus and watermelon seeds to a fine paste with about 2-3 tbsp water. In a hot pan, cook the grated onion until translucent. Add poppy and watermelon seed paste and cook for 2 minutes.
Gradually add the curd and mix well. Bring to a boil. Add garam masala powder, red chilli powder, salt, diluted cashew butter (if using) and mix well. Cook for 2-3 minutes. Add tofu and 1 cup water and let it cook until the tofu softens and the gravy thickens. Garnish with coriander leaves before serving.
Serves 4 – 6