* Activists accuse DLF, Gandhi son-in-law of improper deals
* DLF shares fall 7.3 pct
* DLF, Gandhi family member deny accusations
(Updates with share fall, adds quote, details, background)
By Rafael Nam and Aditi Shah
MUMBAI, Oct 8 (Reuters) - The Indian government ruled out an inquiry into allegations of improper dealings between the son-in-law of India's most powerful politician, Sonia Gandhi, and property developer DLF Ltd, even as the firm's shares plunged on the claims.
Robert Vadra, a flamboyant businessmen who is married to the daughter of the ruling Congress party chief, has denied the accusations, levelled by anti-corruption activists, of improper dealings with DLF , India's biggest property developer.
Shares in DLF, which has also denied the allegations, plummeted 7.3 percent on Monday, posting the company's biggest daily fall since Feb. 22 and wiping $576 million off its market value. Traders said investors were spooked by the allegations.
"I think those who made their allegations have made their statement, the company concerned has made a statement and the individual concerned has made a statement," Finance Minister P. Chidambaram told reporters.
"Now beyond that, I have no facts and unless there is a specific allegation of quid pro quo or corruption, I am afraid private transactions cannot and ought not to be allowed to questioned on the basis of imputations and insinuations."
India Against Corruption activist Arvind Kejriwal, who is setting up an anti-corruption political party, accused DLF on Friday of arranging favourable loans and real estate transactions for Vadra. The claims were detailed in a document posted on the group's web site.
"We would like to state that the business relationship of DLF with Mr Robert Vadra or his companies has been in his capacity as an individual entrepreneur, on a completely transparent and at an arm's length basis," DLF said in a statement.
"Our business relationship has been conducted to the highest standards of ethics and transparency, as has been our business practices, all around."
Vadra also issued a statement calling the accusations "utterly false, entirely baseless and defamatory".
As a member of India's widely revered "first family", Vadra is close to the centre of power. Sonia Gandhi is known to play a major role in decision-making on big policy issues and her son, Rahul, is seen by many in the Congress party as a strong contender to be the next prime minister.
The businessman condemned what he said were attempts to "deliberately misrepresent numbers contained in my financial statements, manufacture lies and malign my family in order to gain cheap publicity for them and for the launch of their political party".
Vadra married Sonia Gandhi's daughter, Priyanka Gandhi, in 1997. A fitness lover with a thin moustache, chiselled torso and enthusiasm for motorbikes, Vadra stepped into the limelight this year by announcing a possible move into politics.
(Additional reporting by Arup Roychoudhury, writing by Rafael Nam and Matthias Williams; Editing by Robert Birsel)
Keywords: INDIA VADRA/DLF