The temple that figured in the news regarding the institution of the Devadasis is the Jagannath Temple in Puri, which corresponds to Option 1.

The Devadasi system was a traditional practice in some temples in India where young girls were dedicated to serving as temple dancers and performers. These girls, known as Devadasis, were often from impoverished families and were considered married to the deity of the temple. They would perform various rituals, dances, and ceremonies as a form of religious devotion.

In recent years, the practice of Devadasis has faced significant controversy and criticism due to issues of exploitation and the violation of human rights. Many cases of abuse, sexual exploitation, and trafficking have been reported in connection with the Devadasi system.

The Jagannath Temple in Puri, Odisha, is one of the most renowned and significant temples in India. It is dedicated to Lord Jagannath, a form of Lord Vishnu. In the past, the Jagannath Temple was known for its association with the Devadasi system. Devadasis were traditionally associated with the temple and performed various rituals and dances as part of the temple ceremonies.

However, over time, the practice of Devadasis at the Jagannath Temple and in many other temples across India has been widely condemned and declared illegal. Laws have been enacted to abolish the Devadasi system and protect the rights of women and children involved in such practices.

It is worth noting that the other options provided do not have a direct historical association with the Devadasi system. The Pashupatinath Temple in Kathmandu, Nepal (Option 2), is a prominent Hindu temple dedicated to Lord Shiva. The Kandariyamahadev Temple in Khajuraho, Madhya Pradesh, India (Option 3), is a renowned temple dedicated to Lord Shiva and is famous for its intricate sculptures. The Chaunsathyogini Temple in Bheraghat, Madhya Pradesh, India (Option 4), is a temple dedicated to the 64 yoginis, female deities associated with the Tantric tradition.

In conclusion, the Jagannath Temple in Puri is the correct answer as it has been historically associated with the institution of the Devadasis, which has faced scrutiny and criticism in recent times.