i would like to know whether its required to control RTS and CTS signals to get the response from Xbee to the microcontroller for the command frame sent.
I don't know your particular devices, but in general, you don't need to use the CTS/RTS signals with an RS-232 UART. If you have such signals but don't use them, it's safest to pull them in the operational direction; that is, CTS should always assert "clear" so that the other side can transmit whenever it wants, and RTS should always be requesting permission to send. However, you should be able to configure your UARTs to ignore these signals.
"whether its required to control RTS and CTS signals to get the response from Xbee"
That is a question about XBee - it has nothing to do with Keil, nor Keil tools, nor the 8051, nor any other microcontroller!
If you want details of the Xbee operation, then you will have to study the Xbee documentaion and other supporting resources available from Xbee.