"I have a relay onboard my 8051 which make/break 110VDC power to the contactor coil ,which in term ON/OFF the Motors. "

Make / Break 110V dc with a relay sitting on the MCU board. A sure recipe for disaster - if I were you I would defenitley move the relay away from the board. Designing such PCB's with 5V and 110V on them is not for the weak in heart.

And it would be a good idea to fit 3-phase snubbers on to the motor terminals.

One more point is the digital input from the thermal overload relay - I am sure it must be sitting on the motor and could be a nasty source of noise. I am sure this input is properly isolated and then fed to the MCU.

One last point - if you can lay your hands on a scope - just probe the 5V supply when the Grinder motors switch ON / OFF. You will be able to pin point as to which is the event that is the rouge...

Raghu