The Sepoy Mutiny, also known as the Indian Rebellion of 1857, was a significant event in Indian history. However, the question states that a sepoy mutiny had broken out in Bengal much earlier. Let's explore this in detail.

The correct answer to the question is option 'B,' which states that the sepoy mutiny had broken out in Bengal in 1764. Here's why:

1. Background: Before we delve into the events of 1764, it's essential to understand the context leading up to it. The British East India Company had established its presence in India since the early 1600s. By the mid-1700s, they had gained significant control over various parts of India, including Bengal, through a combination of diplomacy, trade, and military conquest.

2. Bengal Army: The East India Company recruited Indian soldiers, known as sepoys, to serve in its army. The Bengal Army was the largest and most crucial component of the Company's military establishment. However, the sepoys were treated poorly, with low pay, long hours, and discriminatory practices.

3. The Mutiny: In 1764, the Bengal Army was engaged in a war against the Nawab of Bengal, Siraj-ud-Daula. However, the East India Company had made an alliance with Mir Jafar, one of Siraj-ud-Daula's generals, to overthrow him. When the sepoys discovered this, they were outraged, as Siraj-ud-Daula was their legitimate ruler. They began to mutiny and refused to fight for the British.

4. Consequences: The mutiny was eventually suppressed by the British, but it had significant consequences. The East India Company realized that it could not rely entirely on Indian soldiers and began to recruit more British soldiers. It also introduced various reforms to improve the conditions of the sepoys, such as higher pay and better treatment.

In conclusion, the sepoy mutiny did indeed break out in Bengal in 1764. While it may not have been as significant as the rebellion of 1857, it was a crucial event in Indian history that highlighted the tensions between the Indian soldiers and their British masters.