To marinade:-
In a large bowl, add smooth hung curd, ginger-garlic paste, salt, turmeric, red chili powder, garam masala, dry kasuri methi leaves, lemon juice. Mix well.

Now add the paneer cubes, capsicum cubes and onion cubes with layers separated.

Gently mix everything evenly into the marinade mixture. Cover the bowl and marinate in the refrigerator for at least an hour or overnight. I refrigerate marinate mixture overnight in airtight container.

For Onion-Tomato Puree: -
Heat 1 tbsp oil in a pan over medium heat. Add onion and sauté till translucent. Add tomatoes, cashews, sugar, salt. Cover and cook for about 5-7 mins until tomatoes become mushy.

Now add turmeric, red chilli powder, garam masala powder. Mix well and saute for 2 minutes.

Turn off the gas and allow the mixture to cool completely before placing in the blender jar. Add 1 cup water and blend it to make a puree.

Pan Frying Method (Grilled): - Heat about 1 Tbsp oil in a wide pan over medium to high flame. Place the marinated paneer cubes in the pan and grill on both sides for 2 to 3 mins. Or until the paneer is golden and the marinade dried up. In the same pan, fry the coated veggies on both sides for about 2 mins or till their marinade dried up.

When one side is crisp and brown, turn to the other. Add more oil if necessary to the pan while frying. Do not over fry. We want paneer and veggies crunchy. Set aside grilled paneer and veggies, while you make the gravy. There is no used to add more oil if you used skewers.

To make Paneer Tikka Masala: -
Heat 1 tbsp oil in a pan. Add bay leaf, cinnamon, cardamom, cloves, ginger-garlic paste and saute for 2 minutes.
Now add onion-tomato puree, 1 tsp red chili powder (optional) and mix well. Add water to the consistency of gravy you want. I added 3/4 cup water.

Cover a pan with lid and cook over low heat for 5 mins or until gravy thickens. Taste salt and add it if needed more. Add Kasuri methi and mix well.

Finally, add the grilled or pan-fried paneer and veggies cubes. Add 2 Tbsp heavy cream and stir.

Turn off the gas. Garnish with fresh chopped coriander leaves and serve hot with Naan or Roti.