Heat the coconut oil in a kadai pan. Add the cumin seeds and cook for a few minutes until the seed start popping. Then add the chopped onion, cinnamon, bay leaf, cloves, cardamon pods, black peppercorns and dried red chili.. Cook until onions soften and begin to brown, about 5 minutes. Medium heat, careful not to burn.
Add the chopped tomato. Cook until softened. Then add the garlic, ginger, kashmiri red chili, turmeric and salt. Mix well, add a tablespoon if necessary to keep stirring without burning. Keep cooking for about 5 minutes.
When the spicy tomato and onion is soft and well mixed. Remove from heat, allow to cool a bit, and remove large pieces of spice. Blend tomato/onion mixture well in a food blender, adding a little bit more water as necessary to get a smooth paste.
Meanwhile, whisk together the peanut butter, coconut cream and warm water (helps to blend the peanut butter).
To the kadai pan, add some butter if you would like for flavor. Then add the blended tomato/onion to the pan and mix and stir well over medium heat.
Whisk in the peanut butter and coconut cream and maybe a little bit more water. Cook and stir over medium/low heat until oil begins to separate out of the curry sauce.
Stir in the chopped paneer, mix and heat.
Remove from heat and stir in the honey and chopped cilantro.