Based on the provided information, I suspect the Grid is initialized two times - once via kendo.bind() and once programmatically via kendoGrid(). The second initialization removes the dataSource settings, or at least I do not see them in the code. As a result, grouping cannot occur, as there is no information where to get the data from.
Duplicate initialization is not allowed:
If your scenario is different, please elaborate and even better, send a runnable example.
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