Cotto was still prospecting in his campaign at 140, then the Torres incident happened and Top Rank started matching him against stickmen with no punching power. While all this was going on Cotto was outgrowing the division. Too many reasons.
At that time 140 was the deepest division in boxing by far. There was Kostya Tszyu ruling the division then there was Mayweather, Cotto, Hatton, Judah (or was Judah at 147 by then?), Shamba Mitchell, and number of other important players. Hatton and Cotto were the two up an coming stars either looking for a big name to fight or build a solid resume. Hatton landed Tszyu and Cotto was still establishing his credentials. There was a number of fights that could have been made for those two around that time, fighting each other was probably the least intelligent fight because of the high risk of damaging their future career from a loss.