I have already replied to your question in the support ticket that you submitted on the same subject. I will paste my reply here as well, so the other users who are interested in error handling could read it.
The error event of the dataSource has only one argument and the $.ajax() error information is part of it. You should expect one argument which will contain the ajax error data.
//the dataSource client object
To avoid any duplication, I would like to ask you to continue our conversation in the support thread.
the Telerik team
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