Wash, clean, and dice the mushrooms. Set aside.
Use a food processor to grind the fresh tomatoes into a chunky paste. Skip this step if you are using canned tomatoes.
Add oil to the inner pot of the instant pot. Set Saute mode for 10 minutes. Heat oil followed by bay leaf and chopped onion. Saute till the onions turn light brown in colour.
Add the ginger-garlic paste, mix well, and cook for a minute. Add the tomato, salt, red chili powder, and turmeric. Saute the masala till it starts leaving the sides of the pot. This takes 2 - 3 minutes. Stir at regular intervals for even cooking.
Add mushroom, ¼ cup water, and stir to combine in the masala. Close the lid of the instant pot. Set Pressure Cook mode for 5 minutes at normal pressure. Set the steam valve to Sealing position.
After 5 minutes, set the steam valve to the Venting position. Open the lid of the instant pot. Add green peas, garam masala, cream, and Kasuri methi.
Set the SAUTE MODE for 5 minutes to soften the peas, and the curry sauce thickens a bit. Stir regularly to avoid burning the curry.
Garnish with fresh coriander leaves.
Serve Matar Mushroom Masala garnished with naan or jeera rice.