Place the beans and bay leaves in a large pot and cover with 2 quarts of water. Bring to a boil then reduce to a simmer. Simmer, covered, for 1 1/2 to 2 hours or until tender. Add more water if necessary to keep the beans well covered.
Meanwhile, heat the olive oil in a large frying pan and saute the peppers, shallots, onion and garlic over medium heat for about 15 minutes or until the onions are translucent.
Add cumin, oregano and lime zest, and transfer to a blender or food processor. Puree until smooth.
When the beans are almost tender, add the pureed mixture and the sugar and salt, and cook until tender, about 20-30 minutes.
Before serving, add the dry sherry and cilantro. Serve topped with sour cream and diced red onions and with a lime wedge and Tobasco on the side.