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David Davidar, author and publisher, photographed at The Book Shop his father-in-law's book store in New Delhi.

Former Penguin Canada president David Davidar left Canada under a particularly dark cloud early this year. But somewhere over the Atlantic, that cloud dissipated, and he landed here to an open-armed welcome. He has resumed his place at the top of the flourishing Indian literary world, and that nasty allegation of sexual harassment in the (other) colonies is yesterday's news.

Two months ago, Davidar, 52, announced he was launching a new publishing house, Aleph Book Co., focusing on literary books, both fiction and non-fiction. The Indian industry, centred here in Delhi, has been watching eagerly: It is a current favourite preoccupation in book circles to speculate on which authors and which executives will defect to Aleph.

His new house will publish 15 or 20 books by the end of next year, Davidar says, although he won't name any of the authors of those planned books, saying he is saving that for a "spectacular announcement" in December. "There will be people Canadians will recognize," he says. "There will be big-name novelists, and the next generation of novelists who will set the world alight."

But he acknowledges he has yet to sign contracts with any authors, and while he has hired a number of high-profile staff, he says, none of the appointments has been announced.

Aleph is a joint venture with Rupa & Co., India's second-largest English-language publishing firm; Rupa is known for publishing commercial books with big budgets (including the novels of Chetan Bhagat, India's biggest-selling author) and for the country's largest distribution network – which is critically important in a market where the bulk of book-selling is still done by independent stores.

"There is a place in India for a company like McClelland & Stewart was when Jack McClelland started the place 40 years ago – a company deeply rooted in this country, with one eye firmly fixed on quality," Davidar muses over lunch in an upmarket and airy Delhi restaurant recently. Poised, solicitous but restrained, he has a sort of global-citizen quality that suggests he would be equally comfortable anywhere.

The ease with which Davidar has been able to re-establish himself here speaks to the position of immense respect he enjoyed before he left India in 2004 to take up the top job at Penguin Canada. Davidar was a bored Mumbai journalist who took a publishing course in Harvard in the early 1980s, so the legend runs, when he caught the eye of Peter Mayer, head of the international Penguin group. Penguin was eyeing India, and Mayer tapped Davidar to start up the company (in a small apartment, with $10,000 as his total budget); it was the first branch of an international publisher here.

There were no big international names in Indian literature, then; it was only a few years since Salman Rushdie's Booker Prize-winning Midnight's Children, a book that caught both Indians and the wider book-reading world off guard. But Davidar began to cultivate Indians writing in English, new voices, and in 1992 he edited a surprising and monumental bestseller, Vikram Seth's A Suitable Boy. Davidar went on to bring a host of other Indian writers to a global audience; at the same time, he created a new book-reading public in India, for literary fiction and for commercial bestsellers such as the sex-and-shopping novels of socialite Shobhaa De, a sort of Indian Jackie-Collins-cum-Sophie-Kinsella. He also published a successful novel of his own, The House of the Blue Mangoes, in 2002.

Two years later, Davidar left for Toronto, and there he presided over a renaissance at Penguin Canada, wooing big-name writers such as Joseph Boyden, who won the company's only Giller Prize, launching the Extraordinary Canadians biography series, and doubling the company's publishing revenue. In the midst of all that, he published a second novel. And in 2009 he was made CEO of Penguin International (which included India, Africa and the Middle East, as well as Canada); he was widely seen as the top contender to head the entire Penguin Group.

And then, last June, Penguin abruptly announced his departure, saying that he was leaving to pursue "his successful writing career and other projects." His sudden exit remained a mystery for a few days until it emerged that a recently dismissed Penguin employee, Lisa Rundle, had filed a $423,000 lawsuit against the company, and a separate $100,000 suit against Davidar, alleging that she was fired after complaining of sexual harassment by her boss.

Rundle and Davidar presented sharply different versions of events; she claimed in the lawsuit that he waged an escalating campaign to seduce her, culminating in him barging into her room while they were attending the Frankfurt Book Fair in October, 2009; he "grabbed her by the wrists, forcing his tongue into her mouth," according to her statement of claim. Davidar himself put out a lengthy, exhaustively detailed statement claiming he and Rundle had a "close friendship," a "consensual flirtatious relationship" that included kissing on two occasions, and that "he has not sexually harassed anyone. He has not assaulted anyone." It concluded by noting that he is "happily married."

While the story was inevitably an exercise in she said-he said, Penguin opted to fire Davidar, quickly settle Rundle's suit and, not long after, reinstate her to her job of director of foreign rights and digital publishing.

Since then, Rundle has left the company. In May, she accepted the position of director of subsidiary rights and list management with HarperCollins Canada. She moved, she says, "because I was offered a very interesting job here." She declined to answer any question related to Davidar (she says she cannot comment on Davidar, or the terms of her out-of-court settlement with him and with Penguin).

Davidar and his wife Rachna Singh stayed in Toronto for seven months after he was fired, figuring out their next move (despite any rumours, he says, "We haven't split up, not even for a day") and, over the course of two months, he wrote his third novel, Ithaca, which will be published in Canada in October.

He says he was awash in offers following his departure from Penguin. "Fortunately I had a whole bunch of options. I had job offers – 'will you run this company' – in both India and Canada – and also offers to run imprints [within publishing companies]" he says. "But I thought it was easiest to start up here, where the market is growing – that it would be smartest to come here." Book sales in India are increasing at 10 per cent a year.

There was another push factor: His wife had lost her job running the McNally Robinson store in Don Mills, Ont., when the independent bookstore chain went bankrupt. Singh comes from minor Delhi publishing royalty; her parents own, and she once ran, what may be the bibliophile city's best-loved bookstore. The couple has no children. While they loved Toronto, Davidar says, it seemed a good time to come back to India.

Although the Canadian scandal was given extensive coverage by the Indian media, Davidar appears utterly untarnished here. A confluence of factors seems to have shielded him: One is his history. "He was an enormously beloved character," says the head of a major Delhi publishing house familiar with his professional history; she declined to be quoted on the record, as she is now a competitor. "David occupied a position in Indian publishing that no one else has. He ran the biggest company, he made it as big as it was, he was a great author's publisher, he had brilliant relationships with people like Vikram Seth who loved him, and by all accounts he was a very good boss."

A second factor is simply Davidar's profile among women in his circle in India. He had several consensual relationships, according to former colleagues. Women he's worked with describe him as "passionate," "magnetic" and "charismatic."

The harassment allegations puzzled those who knew him in Delhi, confirms Sheela Reddy, Delhi-based books editor for the newsweekly Outlook.

Davidar himself is allowing the luxury of distance to help him put a certain spin on the Canadian events. He refers to having "quit" Penguin, and remarks ruefully on sexual-harassment policies run amok, sounding like a liberal reluctantly forced by events into a reactionary position. "This is where women can do stuff. All these laws are necessary but they can be exploited. Having been on the receiving end. ... What can I do?"

That spin would seem to be working, locally – most media coverage of Aleph Book Co.'s launch referred to his "having left" Penguin, and when the scandal is mentioned at all, reporters refer to the harassment as "alleged." That, say many women in publishing here, reflects the fact that sexual-harassment allegations are still not taken very seriously in India.

"It's a different culture where these things don't matter," says Reddy. "In India, these things can easily be overlooked if the person is perceived in different ways as competent. It doesn't really matter – it's not damaging to his reputation."

Davidar is perhaps not unscathed – he declines wine over lunch, saying an attack of gout, brought on by stress, has cut him off alcohol; he makes reference to his departure from Canada as "painful."

But there is a glint in his eye that suggests the success of Aleph, if it comes, will feel like a form of sweet revenge. He is rumoured to have hired away Ravi Singh, the widely respected editor-in-chief at Penguin India, who has left his job there but not confirmed where he is going. Davidar and Ravi Singh would certainly be a formidable editorial team, says Reddy.

Literary columnist Nilanjana Roy sounded a note of caution about Aleph, however: Davidar is returning to a different field than he left, one with more and better-established publishers, staffed with smart editors, many of whom he trained himself. "There are huge expectations: He's now spent several years abroad and the expectation is he will bring standards of international publishing to the industry."

Davidar's new novel, Ithaca, is set in the world of publishing. It tells the story of Zachariah Thomas, a half-Indian, half-English editor at a struggling London book company about to be swallowed by a conglomerate; his marriage is failing, and he flees to Thimpu, in Bhutan, the first of seven cities where the story takes place. The book is eagerly awaited in the publishing world, at least, both here and in Canada, by former colleagues and the curious who wonder just how much autobiography its pages will contain.

Davidar won't say if the story of Zachariah Thomas turns out well in the end – the way fleeing a bad business sometimes can.

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