Thanks Bernard !!

I have found the solution for this issue. It is basically due to IE8 rendering mode. 

when the application is hosted in IIS server, the page is rendered in IE8 Compatibility mode. I just forced the page to render in IE8 standard mode to fix the grid header issue.

I tried by adding a meta tag to render the page in IE* standard mode

 <meta http-equiv="X-UA-Compatible" content="IE=EmulateIE8">

The HTML meta tag is ignored if you have the doctype set to xhtml transitional. The solution is to add an HTTP header in code. 

This worked for us. Now our intranet site is forcing IE8 to render the app in standards mode.

Added to PageInit of the base page class

Response.AddHeader("X-UA-Compatible", "IE=EmulateIE8");

Thanks