The correct answer is C) Muslims feared that Hindus would dominate the legislature.
The Indian Act of 1937 failed because Muslims feared that Hindus would dominate the legislature.
The original intention of the Act of India was to form a Federation. It was passed in 1935. But what happened was that the princely states opposed to the formation of that federation. Muslims feared that Hindus would dominate the legislature. In 1937, with heavy support from the Hindu people, provincial elections were held and the autonomy of the provinces started.