The correct option is C Any situation which does not interfere with the liberty of others
From the given passage, we can say from the following line "Liberty is not a personal affair only, but a social contract. It is an accommodation of interests. In matters which do not touch anybody else's liberty, of course, I may be as free as I like", that the author assumes that any situation that does not interfere with the liberty of others, he/she may be as free as they line. So, the correct answer is option B).