The Indian Independence League was formed by Rash Behari Bose, making option 2 the correct answer.
Now, let`s understand the other options:
Option 1: Aruna Asaf Ali was a prominent freedom fighter in India and was actively involved in the Quit India Movement, but she was not involved in setting up the Indian Independence League.
Option 3: Jayaprakash Narayan, also known as JP, was a prominent political leader in India, but he was not involved in the formation of the Indian Independence League.
Option 4: S.M. Joshi was a socialist leader in India, but he was not associated with the Indian Independence League either.
Therefore, the correct answer remains option 2, Rash Behari Bose.