Second-round action was completed Saturday morning local time after play was halted Friday evening due to heavy thunderstorms.
Retief Goosen, who completed his second-round on Friday, is alone in second place at 12-under-par 130. Ted Oh and Fredrik Andersson are one shot further back at 11-under-par 131.
Atwal began his round Friday with a birdie at the first to get into double digits under-par. He birdied the par-4 fourth, before carding consecutive birdies starting at the sixth that moved him back into the lead at minus-13.
When play resumed, Atwal carded seven consecutive pars before birdieing the par-4 15th. He later birdied the final hole to take a three shot lead entering the third round and give him the lowest 36-hole score on the European Tour this season. His total of 127 is two strokes better than the 129 Ernie Els posted last week en route to a dominating win at the Johnnie Walker Classic.
'I had a tough shot upon resumption with the ball above my feet between the bunkers and pulled it left,' said Atwal, who last season became the first Indian golfer to win on the European Tour. 'But I managed to save my par and after that I hit it well but didn't make many putts. I could have birdied all four coming home but it is nice to be in this position.'
Goosen shot a 64 on Friday to claim second place. That score tied for the lowest of the round.
Padraig Harrington and Thammanoon Srirot, who both completed their rounds on Friday, are tied for fifth at 10-under-par 132.
Defending champion Alastair Forsyth is among a group of 20 players at 1-under-par 141, which was the cut line. Andrew Coltart (even-par 140) and Costantino Rocca (4-over-par 146) are among those who missed the cut.