The accused approached the victim on December 17 and sought the money to allow him to continue his business.
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When the victim did not pay heed to the demand, the accused threatened him with dire consequences, the official from Nerul police station said.
Later, the accused poured petrol at the entrance door of the victim's house and attempted to set it on fire, the police said quoting the victim's complaint.
The police registered a case against the accused on Tuesday under Indian Penal Code sections 387 (putting person in fear of death or of grievous hurt, in order to commit extortion), 504 (intentional insult with intent to provoke breach of peace) and 506(2) (criminal intimidation).