UPDATE 1-Shares in India's DLF fall; questions over deals with Gandhi son-in-law

* Activists accuse DLF, Gandhi son-in-law of improper deals

* DLF shares fall as much as 5.3 pct

* DLF, Gandhi family member deny accusations

(Updates with details, background; recasts throughout)

MUMBAI, Oct 8 (Reuters) - Shares in India's biggest propertydeveloper DLF Ltd fell on Monday after anti-corruptionactivists accused the company of improper dealings with theson-in-law of the country's ruling party chief Sonia Gandhi.

Gandhi's son-in-law Robert Vadra and DLF have denied theallegations.

DLF shares were down 6.6 percent as of 0731 GMT, afterfalling as much as 6.9 percent. The benchmark BSE indexdeclined 0.8 percent.

Activist Arvind Kejriwal, along with a colleague from theirnewly formed political party India Against Corruption, accusedDLF on Friday of arranging favourable loans and real estatetransactions for Vadra.

The claims were detailed in a document posted on the party'sWeb site.

"We would like to state that the business relationship ofDLF with Mr Robert Vadra or his companies has been in hiscapacity as an individual entrepreneur, on a completelytransparent and at an arm's length basis," DLF said in astatement on Saturday.

"Our business relationship has been conducted to the higheststandards of ethics and transparency, as has been our businesspractices, all around."

Vadra also issued a public statement calling the activistaccusations "utterly false, entirely baseless and defamatory."

The businessman condemned what he said were attempts to"deliberately misrepresent numbers contained in my financialstatements, manufacture lies and malign my family in order togain cheap publicity for them and for the launch of theirpolitical party".

Sonia Gandhi has no official government post but is theCongress party president and powerful matriarch of India'swidely revered first family. She is known to play a major rolein decision-making on big policy issues.

(Reporting by Rafael Nam; Editing by Ryan Woo)


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