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In a grinder or blender take all the ingredients Mentioned under "masala paste" - ½ cup chopped onions, ¾ cup chopped tomatoes, ½ inch ginger, (2-garlic, (1-green chilies, (10-chopped cashews, 2 tbsp coriander leaves, (4-black pepper, ½ inch cinnamon, 1 tsp coriander seeds and (2-cloves.
Grind all the ingredients to a smooth paste.
No need to add water while grinding. There should be no small bits and pieces of cashews in the paste.
Keep the ground paste aside.
Heat oil or ghee. Add 1/2 tsp cumin seeds. Saute the cumin till they splutter.
Then add the ground masala paste. Stir. Take care while sauteing as the paste splutters. If there is too much spluttering, then cover partly with a lid till the spluttering stops.
Saute for 10-12 minutes or more on a low to medium flame till the oil separates from the paste.
Add all the dry spice powders - turmeric powder, red chili powder, garam masala powder. Stir well.
If adding cream or malai, you can add now. Stir and saute for a minute.
Then add the peas or matar. Stir again.
Add water and season with salt.
Cover the cooker tightly and pressure cook till the peas are cooked. Cook for about 2 to 3 whistles or 9 to 10 minutes. (check notes below on how to cook in a pan.)
When the pressure drops on its own, open the lid of the pressure cooker.
If the curry appears thin, then simmer till it reaches the desired consistency. The consistency is medium and neither thick nor thin.
If the gravy appears thick, then add some water and simmer.
Add the paneer cubes. Simmer for 1 to 2 minutes on a low flame or till the paneer cubes get cooked. For a slight sweet taste, you can also add sugar just before you add the paneer cubes.
Don't overcook as the paneer becomes dense and hard then.
Garnish it with coriander leaves and Serve matar paneer with Indian Flatbreads like roti, paratha, naan or with steamed basmati rice or cumin rice.