The NCP leader said he would move the Supreme Court against the Kerala High Court's observations against him. The high court had dismissed Mr Chandy's plea to quash an inquiry report that indicted him in connection with the land grab allegations.
"Without any basis, not even one per cent of truth, a (TV) channel had telecast reports against me. Later, other channels followed. But the LDF and NCP leadership did not see it seriously," he told reporters at his home town in Alappuzha.
Mr Chandy arrived at Alappuzha after handing over his resignation letter to NCP state president, TP Peethambaran Master, instead of directly submitting the same to Kerala Chief Minister Pinarayi Vijayan.
The resignation was accepted by Governor P Sathasivam.
Mr Chandy, a businessman-turned politician, travelled in his official car from Thiruvananthapuram after resigning, drawing another round of criticism from various sections.
Youth Congress activists was seen hurling eggs and waving black flags as his motorcade passed by near Alappuzha.
Mr Chandy claimed there were some "errors" in the Alappuzha district collector's report which had held that there were large-scale violations of land rules. The NCP leader had blamed revenue officials for the same.
The NCP leader made it clear that his lawyers would file an appeal in the Supreme Court tomorrow against the high court observations due to which he was forced to resign.
Mr Chandy is the second NCP MLA to resign from the state cabinet after AK Saseendran quit after a sleaze audio clip featuring the latter went viral.
Meanwhile, Mr Peethambaran said whichever party MLA gets his name cleared first by a court of law, will return as minister.
"Chandy resigned as questions were being raised about the credibility of the LDF ministry and not because of the allegations," he told reporters.
Asked if the Nationalist Congress Party (NCP) was unhappy over four CPI ministers' decision to keep away from today's cabinet meeting as Mr Chandy was attending it, Peethambaran said "We have nothing against them. We are not saying whether what the CPI did was right or wrong. You can ask them".
Get Breaking news, live coverage, and Latest News from India and around the world on NDTV.com. Catch all the Live TV action on NDTV 24x7 and NDTV India. Like us on Facebook or follow us on Twitter and Instagram for latest news and live news updates.