Explanation:

Both statements 1&2 are incorrect.

• The Gram Nyayalayas are presided over by a Nyayadhikari, who will have the same power, enjoy same salary and benefits of a Judicial Magistrate of First Class. Such Nyayadhikari are to be appointed by the State Government in consultation with the respective High Court.
• A Gram Nyayalaya have jurisdiction over an area specified by a notification by the State Government in consultation with the respective High Court.
• Both the Central and the State Government can add or remove items in the Schedule. While the Central Government can amend the list in Schedule I and II, by notifying them and thereafter laying it in the Parliament, the State Government can amend the items in Part III of Schedule I or II, in the areas of law which the state is competent to enact law after due consultation with the respective High Court and notifying it. Such notification has to be laid in the State Legislature.

Hence option 1st is correct.