Start by separating two words that look alike but do very different work in tort law. "Damage" is the harm or loss a person actually suffers, counted in rupees. "Injury" is the breaking of a legal right that belongs to that person. A civil suit is built on injury, not on damage. Mr. X's pocket was picked, so his damage is obvious. The whole case turns on whether the Railways broke any right of his.
So the answer is option (C). Compare the mirror rule, injuria sine damno, seen in Ashby v. White, where a voter was wrongly stopped from voting, lost nothing in money terms, and still won, because his legal right was broken. Mr. X is the reverse picture: loss in his pocket, no right of his broken by the Railways.
Let's summarize:
Since no legal right of Mr. X was infringed by the Railways, the loss gives him no cause of action, making option (C) correct.