Briefly fry half the cardamoms in the oil. Add the onion and fry until translucent.
Add the tomatoes and salt. Fry for 3 minutes. Cover and cook until tomato is soft.
Grind the garam masala, coriander seed, cashews, half the chile powder, and sugar to form a coarse mixture. Add to the pan and fry until aromatic and the sauce is reduced and begins to pull away from the pan.
Puree the sauce with 1 cup water until very smooth. Set aside.
Fry the cinnamon, cloves, remaining cardamom, and bay in the butter until aromatic.
Add the ginger-garlic paste and saute until the raw smell dissipates.
Add tomato sauce and remaining chili powder, mixing well. Add an additional 1/2 cup water, cover, and cook until thickened.
Reduce heat and add the paneer and kasuri methi. Mix and cook, covered, until paneer is hot, 3 minutes.
Garnish with cream and coriander leaves.
Made double batch with fresh bay leaves, 1/8 t. chile powder, and roma tomatoes. As usual, didn't add the cream or cilantro. Simmered sauce for ~45 minutes before adding paneer. Sauce was very good (albeit quite grey), but not quite as good as my previous make.
Simmered the sauce before and after blending for a very long time, resulting in a very delicious and thick sauce. I would highly recommend extended simmering of the sauce to melted the flavors.
Used tofu instead of paneer, simmering it for a while in the sauce. Could have used longer but wasn't bad.
Made a double batch. Used fresh tomatoes - some red, but mostly yellow. The sauce definitely looks nicer when using red tomatoes.
Added 1/2 tsp. kosher salt in total which was almost just right. Added 2 tsp. garam masala which was much better than before. Diced the paneer and soaked in warm water while sauce was cooking.
Let sauce simmer for much longer at the end, and it definitely has more flavor. Still could use more garam masala.
Used half a large vidalia, canned crushed tomatoes, 1/16 tsp. chili powder, an additional 1/4 tsp. salt, and omitted the cream and cilantro. Served with Jasmine rice, chickpeas, and a dollop of yogurt. Could use more salt, and longer final simmer with all the spices - couldn't really taste the whole spices at all.
Made a quadruple batch of the sauce, freezing half for later use. I spent probably close to 2 hours on the first simmer of the sauce until it was reduced to a very thick paste, and then another hour or so on the second simmer to really meld the flavors of the spices. The long, slow cooking time was definitely worth it, as this sauce is amazing.