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In a large skillet, (a non-stick works great here) heat a few tablespoons oil or ghee and season the oil generously with salt and pepper. Pan-sear the paneer or crispy tofu until golden and crispy, and set it aside, covered with foil.
Wipe out the skillet, heat 3 tablespoons ghee over medium heat. Add onion, ginger, garlic and chilies, and sauté until deeply golden and fragrant, stirring often, about 15 minutes, taking your time here.
Add the spices (coriander, cumin, garam masala and mustard seeds) and sauté 2-3 more minutes. Add the frozen spinach and cup of water, lower heat and simmer uncovered until the spinach is just thawed.
Place this in a blender, (see notes) topping it with the yogurt and cashews. Add the salt and sugar. Blend well, until silky smooth. If the mixture is too dry to blend, add just enough water to get the motor going. Taste, and adjust the heat by adding a little cayenne if you want more of a kick. Add a squeeze of lemon if you want it tangier.
The sauce will seem slightly salty at first but once you add the paneer, it will soak up the salt.
Place the blended spinach sauce back into the pan uncovered, on med-low heat. (Covering it will lose the lovely vibrant color ). Warm it up gently and slowly, stirring often so it doesn’t burn. Add the pan-seared paneer and continue cooking until the paneer is warmed just warmed through.
Enjoy this over Fluffy Basmati Rice, with Naan Bread, over Quinoa or cauliflower rice.