Section 35B CPC can be understood by looking at why it was added and exactly what tool it gives the court, rather than treating it as a general punishment provision.
Matching this against the four options shows that dismissal, unconditional continuation, and adjournment as a right are all outside what the section actually does; only the costs-as-precondition mechanism matches.
The correct answer is impose costs as a precondition for allowing further prosecution.
The two options most likely to be confused here are dismiss the suit and impose costs as a precondition, since both look like a serious consequence of default. Separating these, and then handling the remaining two options, gives the answer.
The provision sits between doing nothing and dismissing the suit, it lets the case continue but only after the defaulting party bears the cost of the delay.
So the correct answer is impose costs as a precondition for allowing further prosecution.