The body of a 20-year old political activist, Siddhesh Pawar, was recovered a few hours later from the capsized boat with the hep of Navy divers and fire brigade personnel.
The incident happened around 4.15 pm when the boat's hull was ruptured after hitting the rock, water quickly started flooding inside, and it tilted dangerously, triggering panic among the passengers.
Chief Minister Devendra Fadnavis told the media that he will order a detailed investigation into the incident.
The body of a 20-year old political activist, Siddhesh Pawar, was recovered a few hours later from the capsized boat with the hep of Navy divers and fire brigade personnel, said an official of BMC Disaster Control.
Two others injured -- Vikrant Ambre (50) and Ashok Lodha (53) -- were treated at a hospital and later discharged.
Mete said around 200 persons including mediapersons, government officials and political activists had departed in several boats from the Gateway of India jetty for the memorial function.
"I have visited that site over a dozen times, but such a thing has never happened. The authorities had taken all safety precautions and the boats were not overloaded," Mete said after returning to the jetty.
Earlier, the Indian Navy, Indian Coast Guard, Marine Police and other agencies launched an operation with three helicopters, a hovercraft and boats to search for Pawar.
A second boat which was in the vicinity managed to reach the tragedy spot within minutes and helped rescue all the people who were on board the boat. The damaged boat was towed away by a Marine Police vessel to Sassoon Docks in Colaba.
Official sources said confusion prevailed over the incident, as there was no list of crew or passengers available. There were two boats that had gone to the site but it was unclear if the passengers were wearing safety jackets since the sea continues to be rough.
Following the incident, the state government postponed today's planned function.
Leader of Opposition Radkakrishna Vikhe-Patil, activists, fishermen leaders and opposition legislators today criticized the government's decision to go ahead with the memorial though the proposed site is unsafe.
Some eyewitnesses claimed that the boat pilot had lost the way and it was drifting in the vicinity for over an hour before it hit the rock, besides passengers were reportedly not given life-jackets.
Education Minister Vinod Tawde, who went to meet the rescued persons, termed the incident as "extremely unfortunate".
Located around 3.5 km in the Arabian Sea off Marine Drive, the site envisages a grand 212-metre tall statue of Chhatrapati Shivaji on a 84-metre high pedestal, along with a huge memorial complex after reclaiming around four acres of land from the sea.