Fill in the blank with the appropriate Modal from the options given b…

The correct answer is Option (1) → could

Note: The given answer is as per the official NTA Answer Key. However, more than one answer is possible here: Option (1) "could" and Option (2) "might" both make a correct sentence, as explained below.

Option 1: could — Correct (Answer as per NTA).

• Could is the past form of can, and can is used to give permission.
• The sentence reports permission in the past: he said, "You can use my telephone at any time" → He said I could use his telephone at any time.
  Complete sentence: He said I could use his telephone at any time.
  Example: The teacher said we could leave early.

Option 2: might — Can also be considered as correct.

• Might is the past form of may, the more formal word for permission.
• "You may use my telephone" in reported speech becomes "He said I might use his telephone at any time", which is equally correct.
  Example: The principal said that we might use the library on Sundays.

Option 3: should — Incorrect. Should expresses duty or advice; "I should use his telephone" would mean he advised me to use it, not that he allowed me to.
Example: You should drink plenty of water in summer.

Option 4: would — Incorrect. Would expresses future in the past or willingness; "He said I would use his telephone" is a prediction about me, which makes little sense with "at any time".
Example: She said she would call me in the evening.