Meanwhile, the RSS has also stripped Chandravat of the post of Ujjain Mahanagar Sah Prachar Pramukh (joint chief of publicity).
"We booked Chandravat yesterday under IPC section 505 (1) (B) (whoever makes any statement with intent to cause, or which is likely to cause, fear or alarm to the public, or to any section of the public whereby any person may be induced to commit an offence against the State or against the public tranquility)," said Ujjain district Superintendent of Police Manohar Verma.
Madhav Nagar Police Station Inspector Mahendra Singh Parmar said the accused has not been arrested yet.
RSS senior state functionary Prakash Shastri said in a statement issued today, "Chandravat has been stripped of the duties of Mahanagar sah prachar pramukh."
Mr Chandravat had recently announced the bounty to avenge the killing of RSS workers in Kerala, allegedly by CPI-M workers.
His speech sparked an uproar, drawing condemnation from the RSS, the CPI(M) and the Congress two days ago.
In a video, which went viral, Mr Chandravat could be purportedly seen saying that Kerala Chief Minister Pinarayi Vijayan is behind the killing of RSS workers there and he will pay Rs 1 crore to anyone who beheads him and brings his (Vijayan's) head to him.
He also claimed that 300 innocent people belonging to the RSS had been killed but the Kerala Chief Minister was turning a blind eye.
The RSS was quick to condemn Chandravat's statement, stating the organisation did not believe in violence.
Kerala has been witnessing a series of political clashes between the cadres of BJP-RSS and the ruling CPI(M), especially in the northern Kannur district from where Vijayan hails, for a long time.
Both parties have blamed each other for the cycle of violence which has claimed several lives on both sides.
As his remarks drew condemnation from various quarters, including the Sangh, Chandravat had retracted his statement. He had claimed he got some phone calls from Kerala threatening to kill him and was being targeted in social media.
"I was pained on the issue of murders of Swayamsevaks and therefore made an emotional statement. I retract it (statement) and express my regret," Mr Chandravat had said in a statement.