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Chop the onions and slice the green and red chili peppers. Remove the seeds if you prefer less heat in your apple curry.
Wash and cut apples into quarters. Do not remove seeds or the core. Halve the quarters length-wise for thinner slices or across for chunkier pieces.
Heat the oil over medium heat in a non-stick saucepan or skillet.
Add the onions, bay leaves, green and red chili pepper and mustard seeds, and saute for a few minutes till onions are softened.
Add the Sri Lankan curry powder, turmeric and chili powder and mix for about 30 seconds, just until you start to smell the spices.
Add the sliced/quartered apples, garlic, salt and sugar and cook on medium high heat for a few minutes while gently coating the apples all over with the spices.
Cook the apples for about 10 minutes - uncovered, stirring occasionally. The apples will start to soften slightly.
Add the coconut milk and water/apple cider and stir through with the apples. Return to the stove for another 5 - 10 minutes covered, until the apples soften.
Taste and season with more salt if desired.
Carefully stir through to coat the apples with the sauce/gravy - since the apples have softened and you don't want them to break up.