Network congestion occurs _________

Network congestion is a state in which the traffic offered to a network approaches or exceeds the capacity of its links, switches, and routers to carry it, causing increased queuing delay, packet loss, and reduced throughput — fundamentally a case of demand exceeding supply.

Here, "in case of traffic overloading" describes exactly this condition — the volume of data offered exceeds what the network can handle — so it correctly identifies network congestion.

By contrast:

• "when a system terminates" describes a process or host shutting down — an availability event, not a traffic-volume condition.

• "when connection between two nodes terminates" describes a link or session going down — a connectivity failure, not a measure of how much traffic is flowing.

• "in case of transfer failure" describes a specific transmission not completing successfully — a possible symptom in a congested network, but not the definition of congestion itself.

Networks counter congestion with open-loop techniques (prevent it before it starts, e.g. admission/policy control) and closed-loop techniques (detect it and react, e.g. TCP's congestion window adjusting to packet loss/timeouts) — confirming that congestion is fundamentally about traffic volume overwhelming capacity.