After makers of "Udta Punjab" - Kashyap's Phantom Films and Balaji Motion Pictures - were asked to make 89 cuts to the movie to get a release certificate, the "Black Friday" maker had condemned Nihalani for being an "oligarch" as head of the Central Board of Film Certification (CBFC).
Asked if he was under political pressure regarding the the film, which highlights the drug issue in Punjab, Nihalani told news channel TimesNow: "Absolutely not. I have not met... and I am not aware of who is handling what."
Then why is Kashyap targeting him?
"That is his call... I have heard he has taken money from AAP... So where is the question? He is a sponsor of AAP."
Asked if he meant that Kashyap had taken money from the Aam Aadmi Party to show Punjab in poor light, Nihalani said: "Yeah, that is what I have heard. That talk is going on in the film industry."
The AAP, which rules Delhi, is a major contender for power in Punjab where assembly elections are due next year.