Shares in United Spirits plunged nearly 6% on Monday after a regional court last week annulled a stake sale to British drinks giant Diageo.
United Spirits, India's biggest liquor firm, slid 5.97% to a low of 2,511 rupees on the Bombay Stock Exchange on the back of Friday's court decision.
The Karnataka HC ordered the cancellation of the sale in response to a petition filed by creditors of United Breweries Holdings Ltd (UBHL) which sold a seven % stake in United Spirits to Diageo five months ago.
UBHL is part of the corporate empire of flamboyant Indian liquor baron Vijay Mallya that includes debt-laden Kingfisher Airlines which owes tens of millions of dollars to creditors.
UBHL had given guarantees worth millions of dollars to Kingfisher Airlines' lenders.
Creditors of the airline have been chasing return of their money by seeking to derail the Diageo deal. They seek to force the sale of UBHL and take the proceeds to settle their claims.
London-based Diageo has said it will challenge the court decision which threatens its control of United Spirits.
Diageo had earlier this year announced it had sealed a 52.4-billion rupee ($845-million) deal to acquire a quarter of United Spirits' shares which made it the Indian company's controlling shareholder.
The court ruling would lower Diageo's stake in United Spirits to 19.39%, reducing it to minority shareholder status -- making it less able to introduce sweeping policy changes in the company.
Diageo tied up with United Spirits to give it a dominant presence in the world's biggest whisky market. But the transaction has been fraught by regulatory and other hurdles.