In the case of MK (India), the child’s parents were overstayers in the UK when MK was born in Britain.  His parents tried to register him as a British citizen, but the Home Office refused the application.
In a Judicial Review challenge to the Home Office’s decision, the court examined Indian law surrounding nationality and declared the child stateless and therefore, Schedule 2 of the British Nationality Act 1981 applied.  The judge also held the fact the child could apply for Indian citizenship was irrelevant.