Replace the underlined part of the sentence with a suitable option, if necessary:
Hardly had he reached home when the telephone rang.

• The given underlined part is in the past perfect tense and a time clause. In the given sentence, hardly is the adverb part of the speech that refers to the situation that takes place immediately after another or the event that quickly takes place after another event.
• In this type of sentence, the event that takes place first should be in the past perfect tense, therefore options B and C are incorrect.
• Inversion of the subject and auxiliary words take place if we use hardly in the initial position of the sentence, so option A is incorrect.
• The given sentence is correct and it does not any improvement.

Hence, option D is the correct answer.