'image'=>array(
'class'=>'application.extensions.image.CImageComponent',
'driver'=>'GD',
) 

Now in action, insert the following code and modify paths

$model->Picture = CUploadedFile::getInstance($model,'Picture');
if( is_object($model->Picture) )
{
    mkdir(getcwd().'/images/users/'.$model->Id."/");
    $name = getcwd().'/images/users/'.$model->Id."/".$model->Picture->getName();
    $model->Picture->saveAs($name);
    $image = Yii::app()->image->load($name);
    $image->resize(50, 50);
    $image->save();
}

 Source: http://docs.kohanaphp.com/libraries/image