Heat a heavy-bottomed cooking pan or Kadai over medium heat. Add butter and oil to it. As the butter starts to melt, add bay leaf, cinnamon, green cardamom, black cardamom, and cloves to the pan.
Sauté for a few seconds until the whole spices are fragrant. Now add Kashmiri red chili powder to the whole spices.
Mix until fully combined. Do not cook for long or the chilies will burn. Next, add the butter gravy back to the pan. Mix until the sauce is fully blended.
It’s time to season our masala. Add the coriander powder, turmeric, sugar, and salt to the masala. Stir around a while until the spices are well blended in the gravy.
Cook the mixture for 2-3 minutes, stirring occasionally. Now add the tomato paste and garam masala powder to the cooking gravy. Cook for another 1-2 minutes on medium heat. Keep stirring.
Now add water to the butter masala gravy. Depending on the consistency you like, add water slowly. If you prefer a thick gravy, add less water than recommended in the recipe.
By now, the masala will start to ooze oil from the sides. Add Kasoori methi to the cooking gravy; mix it well. Now, add our star ingredient – paneer cubes to the gravy.
Gently mix the paneer into the gravy. Add cream to the gravy. Cover and allow the paneer butter masala to simmer for 4-5 minutes on low heat. After the time has elapsed, take the pan off the heat, and our delicious and creamy paneer butter masala is ready to be devoured.