Heat oil in a cooking pot. Add chopped onions and fry till translucent. Add chopped ginger and garlic and fry for 5 minutes on medium heat. Add the garam masala and fry further 2 minutes.
Add the tin of chopped tomatoes and salt to taste and fry till the oil leaves the sides. Add the sugar to taste and let the mixture cool. Blend the mixture in a blender.
Put the paneer pieces in hot water with a pinch of turmeric to soften the paneer; drain.
Put the blended mixture back in the pan and heat mixture for another five minutes. Add the cream and then add the drained paneer pieces. Switch off the heat and garnish with coriander. Serve with pulao rice or chapati.