Kashif:
Take a look at the code in listing of the IAP (in application programming) loader I created for use with a C8051F126 part. It shows a complete implementation of a UART interrupt mechanism. This code should be very similar to what you would need to create. (Do note that the 'F126 part has so many SFRs that they have to be paged and you may have to read around that for use on your 'F040. Also keep in mind that the code in the linked document actually shows a capablility of support for using either one of UART0 or UART1.

http://www.8052.com/users/mkaras/loader.pdf

Michael Karas