Employer asks to serve notice period on rejecting offer letter.

I signed an offer but later due to personal reasons, rejected it (1 week from date of joining) by informing the employer in a very mild manner. However, the employer has issued legal notice, saying that I have to either: A. Join the organization on said date and then resign and serve 3 month notice period; or B. Pay 3 month salary in lieu of notice period within 3 days. I read the offer letter, there is no mention of penalty. Only in the Termination clause it is mentioned that either party can terminate contract by giving a notice of 3 months or 3 months salary in lieu of notice period.