Finely dice onions. Crush ginger and garlic together.
In a pot heat oil. Add cumin seeds. When cumin seeds starts to sputter add bay leaf, asafoetida, turmeric, crushed ginger garlic, fennel seeds and saute it on low heat for about a minute.
Add diced onion, salt and 1/4 cup water. Cover it with the lid and let it cook for 10 minutes on low heat.
When the onions are cooked add garam masala, coriander powder, cumin powder, crushed red pepper flakes and sugar. Saute it for a minute.
Turn off the burner. Add beaten curd. Turn on the burner and saute for 5 minutes.
Add paneer and saute it for 5 minutes.
Notes
Cook the onions thoroughly. As we are using only onion in this dish, cooking it thoroughly will help turn it into coarse gravy.