Thank you for your response. But, it looks like you've misunderstood my problem statement, where I was trying to get help on getting rid of the horizontal scroll behavior. I would like to fix this behavior, rather and get the vertical behavior working.
Surprize: And, if Kendo does not support horizontal scroll right now, then I guess it does now, as the drop down list renders options on a single row with a horizontal scroll bar on my application.
I have attached a short clip of the behavior of the control and the source walk through and can be found in the link below.