In a large pan, heat about 1 tablespoon of butter or oil. Cut the paneer into ½ inch cubes and shallow fry them until golden. Once done, transfer the paneer to a bowl of hot water to keep it soft until you're ready to use it.
In the same pan, add another tablespoon of oil. Sauté the cloves and cinnamon for about a minute until they become fragrant.
Add the chopped onions to the pan and cook them until they turn translucent. Then, incorporate the ginger and garlic, frying for a couple of minutes.
Next, add the chopped tomatoes along with the cashew nuts, and sauté until the tomatoes become mushy.
Once the mixture has cooled down, transfer it to a blender and blend it into a smooth paste. Make sure it cools completely to avoid any mess while blending.
Return to the pan and heat the remaining oil or butter. Add the bay leaf, then pour in the ground masala. Cook on low to medium heat until it becomes aromatic and the oil starts to separate from the mixture, which should take about 10 minutes. Cover the pan to prevent splattering.
Stir in the dry spices: turmeric powder, red chili powder, coriander powder, and salt. Allow it to cook for an additional 5 minutes.
Drain the paneer and add it to the gravy. Adjust the consistency by adding water as needed. Crush the kasoori methi and mix it into the dish.
If desired, add cream for extra richness and let it simmer for about 5 minutes. However, the creaminess from the cashews may be sufficient.
Serve your Restaurant Style Paneer Butter Masala with Avocado Paratha and Mutter Pulao.
