Heat oil in a kadai; add bay leaves, cloves, cinnamon, red chillies, broken into two, and half the crushed coriander seeds; sauté for half a minute. Add onion and sauté for a while; add ginger paste and garlic paste and sauté for a while longer.
Add coriander powder, red chilli powder and tomatoes. Cook over high heat till the oil separates. Add paneer and salt and half a cup of water.
Cook, covered, over low heat for five minutes. Serve hot, garnished with the remaining crushed coriander seeds.