Option 1 states that both Statement I and Statement II are individually true, and that Statement II is the correct explanation of Statement I.

Statement I is true as the Permanent Zamindari Settlement did create a new class of landlords. The Permanent Settlement, implemented by the British in India in the late 18th century, gave land rights to certain individuals known as zamindars, who then became the landlords of the land.

Statement II is also true as the new class of landlords created by the Permanent Zamindari Settlement did become strong political allies of the British. These landlords had a vested interest in the continuance of British dominion because it ensured their position and power as landlords would be maintained.

Therefore, Option 1 correctly explains that both statements are individually true, and Statement II provides the correct explanation for Statement I.