Bind local data to kendo grid and make it sortable - kendo-ui

Question

I am trying to setup kendo mvc ui grid using local data and make it sortable as in this demo Binding to local data.
However grid doesn't show data and if I hook up the onDataBound event, data inside there is undefined.
If I comment out DataSource setup on view, data gets populated at first, but disappears after sorting performed on any column.
I am using Kendo UI version: "2013.3.1119", asp.net mvc 4.
Please advice.
Thanks.
view
#model TestViewModel
#(Html.Kendo().Grid(Model.TestList)
.Name("grid2")
.Columns(columns =>
{
columns.Bound( p => p.Id ).Title( "ID" );
columns.Bound( p => p.Name ).Title("Product Name");
})
.Pageable()
.Sortable()
.Scrollable(scr=>scr.Height(430))
.Filterable()
.DataSource(dataSource => dataSource
.Ajax()
.PageSize(20)
.ServerOperation(false))
)
controller and model
public class TestController : Controller
{
//
// GET: /Test/
public ActionResult Index()
{
var mdl = new TestViewModel();
mdl.TestList = Test().ToList();
return View(mdl);
}
public IEnumerable<TestMe> Test()
{
var lst = new List<TestMe>();
for( int i = 0; i < 5; i++ )
{
lst.Add( new TestMe
{
Id = i,
Name = i.ToString(),
} );
}
return lst;
}
}
public class TestViewModel
{
public List<TestMe> TestList { get; set; }
public TestViewModel()
{
TestList = new List<TestMe>();
}
}
public class TestMe
{
public int Id { get; set; }
public string Name { get; set; }
}