The correct answer is option 2, Montford Reforms. Diarchy refers to a system of government where power is divided between two authorities, usually an elected legislature and an appointed executive. The Montford Reforms were introduced in 1919 by the Secretary of State for India, Edwin Montagu, and the Governor-General of India, Lord Chelmsford.

Under the Montford Reforms, the diarchy system was introduced in certain provinces of British India. The provinces were divided into two categories - the `transferred subjects,` which were under the control of Indian ministers responsible to the provincial legislature, and the `reserved subjects,` which remained under the control of British authorities. The diarchy system aimed to gradually increase the participation of Indians in the governance of the country.

The Morley-Minto Reforms, option 1, which were introduced in 1909, did not include the concept of diarchy. The Simon Commission Plan, option 3, was a constitutional reform plan proposed in 1927 but did not establish diarchy. The Government of India Act, 1935, option 4, introduced a more comprehensive system of provincial autonomy and federalism but did not specifically introduce diarchy.

Therefore, the correct answer is option 2, Montford