Step 1: Understand the question.
We must pick the correct group of meanings for the polysemous word jalaj from items $J, K, L, M$.
Step 2: Recall the meaning of jalaj.
jalaj is jal plus ja, meaning that which is born in water, so anything truly water-born qualifies.
Step 3: Test J and K.
$(J)$ kamal (lotus) grows and blooms in water, and $(K)$ machhli (fish) lives and breeds in water, so both fit.
Step 4: Test L.
$(L)$ badal (cloud) is not born in water; it gives water and is called jalad, not jalaj, so it is rejected.
Step 5: Test M.
$(M)$ moti (pearl) forms inside oysters underwater, so it counts as jalaj.
Step 6: Combine the valid ones.
The correct set is $J$, $K$, and $M$, which is option C.
\[ \boxed{\text{C. } J, K \text{ and } M} \]