To begin, cube the paneer into bite-sized pieces. Dice onions and bell peppers into similar sizes. Keep aside.
To prepare the kadhai masala, dry roast coriander seeds (dhania), cumin seeds (jeera), black peppercorns, fennel seeds (saunf), and whole red chillies on low heat until you get a nutty aroma. Allow them to cool and grind them into a coarse powder. Keep aside.
To prepare the gravy, heat 2 tbsp of oil in a pan. Add in the cumin seeds (jeera) and allow them to crackle.
Add in finely chopped onions and saute until translucent.
Add in ginger garlic paste and saute some more until the onions are almost brown. Add a tsp of salt so that the onions cook faster.
Next, add the dry masalas - Kashmiri red chilli powder, cumin powder, coriander powder, and turmeric powder (haldi). Mix.
Add the pureed tomatoes and saute until the oil starts appearing on the sides.
In the meantime, prepare the paneer and vegetables. In another pan, heat 1 tbsp of oil. Add in the onions and bell peppers and saute on high heat for a few minutes until half done.
Move them to the side. Add the paneer cubes. Mix well. Cook for a minute or two.
Add in salt, Kashmiri red chilli powder, and the kadhai masala prepared earlier. Mix until well-coated.
Add these to the gravy. Mix well. Add some water if required. Cook for a few minutes so that the paneer and vegetables soak in the masala. Do not overcook the vegetables.
Check the salt and add more if required. Adjust the gravy as per your taste.
The Kadhai Paneer is ready to serve. Garnish with garam masala powder and chopped green coriander leaves. Serve with parathas or naans.