Hi Anand,
This error indicates you were either not able to connect to the daemon or there was a problem when launching the server via the daemon.
What daemon and server ports are you using? In the Remote Systems view, select the MVS Files subsystem and right-mouse-click Properties for your z/OS connection. On the Server Launcher Settings property page, you should have the daemon port specified. Make sure that is the correct port. On the Subsystem property page, there is an option to add a server port. What is that set to? By default this is 0. If it's not 0, it's possible it to conflict with some other port or it might be out of the range of potential server ports, depending on how the daemon configured them. Another question, is the server you're connecting to a real mainframe or a containerized virtual test environment? In cloud and containerized environments the ports could be mapped in a such a way that the numbers are different on the client from the server. In those situations, you may need to use the Port Overrides property page of the z/OS connection.
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Dave McKnight
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