The correct option is 2 only because the Cripps Mission proposed that any province not willing to accept the new Constitution could opt for a separate agreement with Britain, reflecting the British recognition of provincial autonomy and a strategy to mitigate discontent. However, the first statement is incorrect as the Constituent Assembly was to be formed only with representatives elected by British Indian provinces, and while princely states were invited to join, there were no provisions for them to nominate members directly. This distinction highlights the Cripps Mission's intent to both address Indian aspirations and maintain British control, making it crucial for understanding the constitutional development during the independence struggle.