Rumen provided the bellow code that successfully implements explained feature of the RadListBox:

<script language="javascript" type="text/javascript">
                var $ = $telerik.$;

                function pageLoad(sender, args) {
                    var listbox = $find("ID of RadListBox in question");
                    var listboxlement = $(listbox.get_element()).find(".rlbGroup")[0];

                    $(listbox.get_element()).find(".rlbList").on({
                        mousedown: function () {
                            listbox.set_autoPostBack(false);
                        },
                        mouseup: function () {
                            listbox.set_autoPostBack(true);
                            listbox.postback({
                                type: Telerik.Web.UI.ListBoxCommand.SelectedIndexChanged
                            });
                        },
                        mousemove: function (e) {
                            var offsetY = e.clientY - listboxElement.getBoundingClientRect().top;
                            var scrollThreshold = 10; // Adjust this value as needed

                            if (offsetY < scrollThreshold) {
                                listboxElement.scrollTop -= scrollThreshold - offsetY;
                            } else if (offsetY > listboxElement.clientHeight - scrollThreshold) {
                                listboxElement.scrollTop += offsetY - (listboxElement.clientHeight - scrollThreshold);
                            }
                        }
                    });
                }
</script>