Drain the soaked chick peas and combine with the water and bay leaf in a large pot. Bring to a boil, reduce to a simmer, and cook, covered, about 2½ hours, until tender. Drain, reserving the cooking liquid, and discard the bay leaf. There should be 3 cups of liquid--add water if necessary.

Heat a large flameproof casserole over low heat and fry the bacon until lightly browned and just barely crisp. Increase the heat to medium and add the onion. Cook 4 minutes, stirring occasionally. Add the yellow pepper and garlic and cook 4 to 6 minutes more, until all the vegetables are softened.

Tip the pan and spoon off all but about 2 tablespoons of the fat. Add the rice and cook, stirring, about 3 minutes, until well coated and Just beginning to brown. Add the sherry, the reserved 3 cups cooking liquid, the chick peas, salt, and pepper. Cook, covered, over medium heat, until most of the liquid has been absorbed and the rice is tender, 25 to 35 minutes. Remove from the heat and let stand 10 minutes, covered.

Fluff the rice with a fork and serve.