He is the second minister to quit the Congress-led Ommen Chandy government after then Finance Minister K M Mani of Kerala Congress (M) resigned in November last over the multi-crore scandal, giving jitters to the United Democratic Front government in Kerala ahead of the forthcoming assembly elections.
Addressing a press conference in Kochi, Babu said he had handed over his resignation to Chief Minister Chandy and was quitting on moral grounds even though no FIR had been registered against him as of now.
Earlier in the day, the vigilance court in Thrissur directed the state vigilance and Anti-Corruption Bureau to register a case against Babu over corruption charges against him in the scam.
Terming the vigilance court verdict as "unnatural", Babu said he would go ahead with legal proceedings to prove his innocence.
In an apparent reference to the liquor policy of the UDF government to close down more than 700 bar hotels as part of its prohibition plan, he described himself as a 'martyr' for implementing a government scheme for the welfare of the society.
He also claimed he was a 'victim' of conspiracy by bar owners who had incurred heavy loss and "who also got support of CPI-M.
Babu alleged that some bar owners had met at the residence of a CPI(M) MLA's house on the evening of December 15 in the "presence of CPI-M state Secretary Kodiyeri Balakrishnan".
"A conspiracy was hatched against me after over 730 bars were closed," he said adding he had been an MLA for 25 years and had come from a humble background.
"I had always maintained that I will not stick on to power on technical grounds," he said.
Biju Ramesh, working president of the Kerala Bar Owners Association, had alleged that Rs 10 crore was given to Babu for renewal of licences of liquor bars. It was on his allegation that the vigilance had filed a case against Mani.