Over ten years ago my mom and I saw Ishmail Merchant demonstrating this on the old Martha Stewart tv show. His recipe is a little complicated for lentils, so I simplified it. This is the BEST lentil soup or side dish I know how to make. (Hey, you can also see this on my blog Obsessed With Dinner).
Serves 4 to 6.

4 cups red lentils (Masoor Dal) picked over for stones
1/2 cup vegetable oil
1 onion sliced and 1/2 an onion diced
4 bay leaves
4 3inch cinnamon sticks
1 diced garlic clove
1 Tbs. fresh grated ginger
1 tps. cayenne pepper
1 lemon - squeeze out the juice, but save the halves
8 cups hot vegetable or chicken stock (and maybe more hot water or stock as it cooks)
maybe salt depending on your stock (don't add it until the end because most stock is really salty)

Step 1: Saute the Onions and Garlic

Saute the onions in the oil until the edges brown. Add the garlic and saute until it just starts to brown.

Step 2: Toast the Spices

Add the ginger, bay, cinnamon, and cayenne and saute for a minute or two to toast the cayenne and get everything hot

Step 3: Simmer

Add the lentils, stock, lemon juice, and squeezed lemon halves. Simmer this for 30 to 40 minutes. Stir it sort of frequently so that the lentils don't stick to the pot.
I often have to add 2 more cups of hot water because I like it like a soup. If you want it to be a side dish you just have to stir it more frequently at the end to avoid adding the extra water.
I freeze this for lunches later, but it's very important to remove the lemon halves (and cinnamon sticks) after it has cooked or else they can make all the leftovers bitter.