Ans. is 'a' i.e. Granuloma annulare Points in favour are:* Diabetic patient* Annular lesions* Palisading granuloma on HPE (most important)Palisading granulomas* They are a subtype of necrotizing granuloma in which the mononuclear phagocytes at the periphery have elongated or spindle-shaped nuclei that are palisaded and arranged roughly parallel to each other and roughly perpendicular to the edge of the central necrotic zone.* Classically they are found in granuloma annulare, necrobiosis lipoidica, and rheumatoid nodule.Other conditions associated with itNon-infectious causes InfectionsInfections* Suture granuloma* Non-tuberculous mycobacteriosis* Churg-strauss disease* Cat scratch disease* Foreign body granuloma* Phaeohyphomycosis* Cutaneous T-cell lymphoma* Sporotrichosis* Wegener's granulomatosis* Cryptococcosis* Steroids* Coccidioidomycosis* Actinic granuloma* Syphilis* Scleromyxedema * Eruptive xanthoma * Cutaneous langerhans histiocytosis * Epithelioid sarcoma