Hello Aamir,
Indeed I reproduced the problem online, however, when I tried to reproduce the problem in a standalone application with both version 1.8.1 and 2.1.1, I had no success, as evidenced by the attached very simple sample. It might be the case that the unexpected behavior is due to something specific to your implementation. Therefore, if the problem persists I'd ask you to open a formal support ticket, isolate the problem in a small test project and send it to us so that we can debug it and get back to you with more information.
Concerning you second question, if you would like to migrate to the ASP.NET AJAX version of the control, please review the following help topic on how to achieve this:
http://www.telerik.com/help/aspnet-ajax/calendar_overviewmigrating.html
Otherwise, you can download the latest internal build for the RadCalendar control (classic version, no ajax) and see if it helps.
Best Regards,
Tsvetoslav
the Telerik team