In a pan, melt the butter and oil on low-medium flame.
Add the bay leaf, cinnamon sticks, cloves, cardamom and turmeric. saute for 30 seconds.
Add the pureed mixture and cook till most of the moisture evaporates, stir in between.
Add the red chilly powder, coriander powder, cumin powder, garam masala, and salt. Cook for a minute.
Add a cup of water and let the curry simmer for five minutes. Add more water if the gravy is too thick. Simmer for 3 to 4 minutes.
At this point taste the gravy and adjust the seasoning.
Add the cubed paneer, kasoori methi, cream and sugar. Simmer for couple more minutes, stirring occasionally.
Enjoy the paneer butter masala with nan, chapathi or rice.