Why does ssh service fail to create session when running from chrooted rescue mode ?

Issue

• Booted a Red Hat Enterprise Linux machine with Rescue media with sshd=1 boot parameter.
• The networking was set up and an IP address was assigned as well. From other machine, the rescue mode machine is accessible via ping.
• The ssh is working as well, but when tried to chroot the machine to /mnt/sysimage, sshd stops working and server is inaccessible.
• Due to some filesystem problems, before chroot, all the necessary filesystems were mounted manually by mount command.
• Why does ssh service fail to create session when running from chrooted rescue mode ?