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However, our problem was to not having it available at all IE 8.
By checking on the server where it was working fine, I noticed that there is a add-on installed with a very clear name: SharePoint DragUpload Control, which is actually allowing IE to work with this functionality.
Checked on Installed IE 8 add-on list and found that ad on STSUpld UloadCtl Class add-on was already enabled.
This adds on is supported by STSUPLD.DLL and is available at location C:\Program Files\Microsoft Office\Office12.
One article says this functionality doesn’t come with IE 8 or IE 9 by default; you need to have SharePoint DragUpload Control installed. Or installing Office 2013 or SharePoint 2013 does the same job for you.
Since we don’t have any plan to upgrade Office as of now and SharePoint Designer 2013 is blocked
There was another Option which MS KB http://support.microsoft.com/kb/2901074 suggested upgrading to compatibles browser or Office package would resolve the issue, since we don’t have that option, so what next.
Well looking at many options it says that we have to have Office 2013 or SharePoint Designer 2013 installed to user this very popular functionality of SharePoint 2013.