Choose the most appropriate option to fill in the blank in the given…

The correct answer is Option (1) → had been cancelled

Past perfect for the earlier of two past actions:

• When two actions are in the past, the one that happened first takes the past perfect (had + past participle); the later one takes the simple past.
• Two-step check: 1. tense - the cancelling came before the past actions "spent" and "set off", so past perfect; 2. voice - the examination is acted upon, so passive (had been + V3).
• Clue words: "spent" and "set off" are in the simple past. The examination had been called off before that night, but the speaker did not know it ("oblivious to the fact").
• The examination did not cancel itself; it was cancelled by someone, so the passive had been cancelled is needed.
• Complete sentence: Oblivious to the fact that the examination had been cancelled, I spent the night tormented with anxiety and set off for the centre three hours early.
  Example: When we reached the station, the train had already left.

Why the Other Options are Incorrect?

Option 2: was not cancelled — Incorrect. If the examination was not cancelled, there was nothing to be "oblivious" of; the speaker's anxiety and early start would be normal, not a wasted effort.

Option 3: is being cancelled — Incorrect. This is the present continuous; the whole sentence narrates events in the past.

Option 4: have been cancelled — Incorrect. This is the present perfect, which does not fit a past narrative; besides, the singular subject "examination" would need "has", not "have".

Contrast: had been cancelled (past perfect passive) marks the earlier of two past actions; "is being cancelled" is present continuous and "have been cancelled" present perfect.