In a frying pan, add 2 tablespoon oil and sauté the cubed capsicum. Do not over-fry the bell peppers. Let it be a bit crispy. Remove from the pan and keep aside in a separate plate.
Roast the cashewnuts and peanuts for 2 minutes. Switch off the gas/heat and let the roasted nuts cool down. After cooling, powder them by adding to a grinder or blender. Remove and keep it aside.
Heat a kadai or wok and add 1 tablespoon oil. After the oil gets heated, add bay leaf and coriander seeds and fry them for 30 seconds.
Add chopped onion and fry till onion turns pinkish. Next add chopped green chilli and garlic and fry till the raw smell of garlic goes away.
Add chopped tomatoes and fry till tomatoes turn mushy. Switch off the gas or heat and let it cool down.
After cooling, add the onion tomato mixture to the grinder/blender and make a thick gravy by adding ¼ cup water.
Heat the kadai or wok and pour the gravy. Simmer for 5 minutes.
Mix the powdered nuts into the gravy and stir well. Add garam masala and red chili powder.
Add the crispy fried capsicum and stir well. If the gravy is very thick, add ½ cup water and simmer for 10-15 minutes.
Add salt to taste and garnish with kasuri methi and chopped coriander leaves.