In a large, deep skillet, heat the oil. Add the mustard seeds and cook over moderate heat just until they begin to pop, about 30 seconds. Add the cumin and curry leaves and cook until fragrant, about 30 seconds. Add the cabbage and turmeric and season with salt. Cook, stirring occasionally, until the cabbage is crisp-tender, about 3 minutes. Add 1/2 cup of the water and cook until the water is evaporated and the cabbage is tender, 5 to 6 minutes longer. Discard the bay leaves, if using.
Meanwhile, in a mini food processor, add the garlic, chile, coconut and remaining 1/4 cup of water and pulse to a paste.
Scrape the paste into the skillet and toss to coat the red cabbage. Cook, stirring, for 2 minutes. Season with salt and serve.