Make a tomato puree by blending the tomatoes & water in a blender, keep this mixture aside.
Remove the seeds from the bell peppers (capsicum) and slice in medium sized pieces, keep this aside separately.
In a pan, heat oil and add cumin seeds.
When the cumin seeds are lightly fried, add the red chilies (if using) and lightly fry the chilies too.
Carefully transfer the pureed tomato mixture to the pan (as the oil is hot do this very carefully without splashing), stir well.
Saute the tomato mixture in for about 2 to 3 minutes.
Add the ginger garlic paste, stir well and saute for another 1 to 2 minutes.
Stir well, cover the pan with lid and cook in low heat for about 7 to 8 minutes so the tomato mixture is well cooked and starts separating from the oil.
Once the tomato mixture is cooked, open the pan & stir the contents. Add all spices and mix well. Let this mixture cook in low heat for another 2 to 3 minutes.
Add the sliced bell peppers also to the pan, stir everything well. If needed, you may add a little more water to the pan (about ½ cup).
Cover the pan again with lid and cook in low heat for another 7 to 8 minutes so the bell peppers are also well cooked.
Open the pan, add the sugar also and stir well the contents and the delicious gravy for the curry is ready.