Kadai Paneer is a common recipe for paneer in which paneer and bell peppers are cooked in a spicy masala. Paneer (Indian cottage cheese) and bell peppers cooked in a spicy masala. Kadai Paneer. This Kadai Paneer style restaurant gets its distinctive flavor from freshly ground spices such as cilantro and red chiles! Enjoy Naan or Paratha with it. This recipe for kadai paneer obtains its special flavors from the freshly grounded masala. It is named masala kadai.