I would suggest that you not mix RadAjaxManager and asp:UpdatePanels. With RadAjaxManager in your MasterPage you can ajaxify and update every single control in your application. I could get the desired functionality on removing UpdatePanel from the MasterPage. Please take look into this help documentation.
i tried to remove the asp:UpdatePanel from the MasterPage but the result is not right, since now any action on the page will lead to a Postback and the page will blink even for grid paging change or any button click
i solved it myself by adding the following parameters to the code:
Which set the UpdatePanelHeight to 100%