The that is crowded and noisy part of the sentence is grammatically incorrect. The correct phrase that should be used here is-- that are crowded and noisy. The Subject-Verb agreement rule is not followed here. Subjects and verbs must AGREE with one another in number (singular or plural). Thus, if a subject is singular, its verb must also be singular; if a subject is a plural, its verb must also be plural. Other places is plural, hence the verb that follows it must also be plural- --are. the correct sentence is- Lodi Colony in Delhi is very different from other places in the city that are crowded and noisy. Hence the correct answer is option 2.