Heat oil or ghee in a deep cooking pot over medium heat.
Add bay leaf, cinnamon stick, and cardamom and sauté for a few seconds until fragrant.
Add sliced onions and cook until they turn light golden.
Add ginger paste and garlic paste and cook for about 1 minute.
Add the mutton pieces and cook while stirring for about 10 minutes so the meat absorbs the spices.
Add yogurt, coriander powder, white pepper powder, and salt. Mix well.
Pour in warm water and stir everything together.
Cover the pot and cook on medium-low heat for about 45–50 minutes until the mutton becomes tender.
Stir occasionally and allow the gravy to thicken slightly.
Add green chilies for extra aroma and flavor.
Garnish with fried onions before serving.
Serve hot with pulao, naan, paratha, or steamed rice.