In a bowl, combine the mutton pieces, turmeric powder, red chili powder, ginger paste, garlic paste, and salt. Mix well, cover, and let it marinate in the refrigerator for at least 2 hours.
In a pan, heat coconut oil over medium heat. Add cumin seeds, mustard seeds, curry leaves, cinnamon stick, cloves, green cardamom pods, and bay leaf. Sauté for a minute until the spices release their aroma.
Add the chopped onions and sauté until they turn golden brown.
In a separate pan, dry roast coriander powder, cumin powder, paprika, fennel seeds, black peppercorns, fenugreek seeds, and dried red chilies until fragrant. Let them cool and then grind into a fine powder.
Add the ground spice mixture to the pan with the onions and mix well.
Stir in the tomato puree and cook until the oil starts to separate from the masala.
Add the marinated mutton pieces and cook until they are browned on all sides.
Pour in enough water to cover the mutton, and season with salt. Cover the pan and let it simmer for about 45-50 minutes or until the mutton is tender and cooked through.
In the meantime, grind the grated coconut with a little water to make a smooth paste.
Once the mutton is cooked, add the coconut paste to the pan and mix well. Cook for an additional 5-7 minutes.
Check the seasoning and adjust salt and spices as needed.
Your Mutton Kolhapuri is ready to be served. Garnish with fresh coriander leaves.