Explanation:

When the hands of the clock are in the same straight line but not together,

they are 30 minute spaces apart.
At 7 o'clock, they are 25 min. spaces apart.
Minute hand will have to gain only 5 min. spaces.
55 min. spaces are gained in 60 min.

5 min spaces are gained in 60/55 x 5 = 5 5/11min

so, required time is 5 5/11min past 3

Hence, option 1 is the correct answer.