I finally got it. Seemed a piece of cake after I did get the two µCs to exchange data. :)

1. µC1 moves the data onto the port
2. µC1 clears its signal (default high)
3. µC2 (which keeps scanning the signal line) then writes FF to its dataport and immediately reads the data.
4. After reading the data, µC2 performs the required calculations and puts the data to be sent back on the datalines and Clears the Signal2 (high by default).
5. The µC1 waits for this signal which is also an indication to it that the processed data is available on the lines. It then writes FF to the data lines and reads the stuff.
and ofcourse, later both the µCs Set their signals high.

This was the way, I achieved the communication.

Till now I was under the impression that when I write a FF to the port, it would make the datalines high and any information that has been put by the other mC would get erased.

Cheers,
Harsha.