I would recommend you to set
"max-height" property on the bdiv of jqGrid and use
"max-height" property will be not used by IE6, but more recent web browsers will use it.
UPDATED: Free jqGrid introduce in version 4.10.0 new property:
maxHeight which do exactly the same as above. Thus one can just use
maxHeight: 300 instead of manual setting of
max-height of the parent