Prepare the paste: Combine green chillies, garlic, black peppercorns, Degi red chili powder, salt, and oil in a bowl. Grind into a smooth paste.
Marinate the paneer: Mix paneer with prepared paste and set aside to marinate.
Fry the paneer: Heat oil in a pan, fry the marinated paneer until golden, and set aside.
Prepare the curd mixture: Mix curd with prepared paste and set aside.
Cook the curry: Saute onions in oil until translucent. Add water, curd mixture, and coriander powder. Cook for 5-6 minutes. Add water to adjust consistency and bring to a quick boil. Add fried paneer and simmer for another 5-6 minutes.
Prepare the tadka: Heat oil, add dry red chillies, cumin seeds, green chillies, and toss. Add fresh red chillies, sugar, and salt, and toss for a minute.
Finish the dish: Add prepared tadka to the curry, mix well, and garnish with coriander and fresh cream before serving.