Section 35B can be tested in two parts: confirming what triggers it, and then matching that trigger to the consequence the section actually attaches.
Test 1, the trigger:
The section is triggered when a party fails to take a step required by the court on a date fixed for that step, a narrower and less drastic circumstance than failing to appear at all or losing the case on its merits.
Test 2, the consequence:
For this specific trigger, the section authorises the court to impose costs on the defaulting party, payable to the other side, as a financial deterrent against delay. Dismissing the suit and proceeding ex-parte are consequences tied to different, more serious defaults under other provisions, and treating adjournment as an automatic right does not appear in the section at all.
Conclusion:
Matching the narrow trigger of Section 35B to its actual consequence leaves only the imposition of costs as correct.
Section 35B exists to discourage parties from dragging out litigation through avoidable delay, while still keeping the case alive so it can be resolved on its merits. Testing each option against that purpose shows which one the section is actually built to deliver.
Only a costs order strikes the proportionate balance between discouraging delay and allowing the case to proceed, which is the purpose Section 35B serves.
Therefore, the correct answer is Impose costs on the defaulting party.