The correct option is C When the festival was due to start
The sentence indicates that there was something that no one knew, almost seeming that there are a lot of people not knowing it. It can be very well assumed that it is pertaining to a large scale event, and thus the festival is the best option for consideration. This reasoning eliminates option A. The statement of option B consists of the wrong tense, incompatible with that in the first part of the sentence. The syntax of the statement of option D is that of an interrogative sentence, and thus unfit for the first part. Therefore, option C is the most suitable option.