Help with file permissions and file ownerships

Hi,
I've a query regd file permissions and file ownerships.

Say for example i've 2 users - user1 and user2, then
a. The ownership of the files created by user1 has to be transferred to user2
b. File permissions has to be set such that user2 only has read,write,execute permissions and all others has only read access.

I guess using chown and chgrp, we can change the ownership of the files (please correct me if any other method is available). But how to set file permissions also as required.

Kindly appreciate your help in this.

Thank You.

Use chmod (eg. chmod 0744)

But if i login as user1 and do chmod will that file permissions be set for user2 ?

No. In UNIX you can set for each file the owner, the group and the permissions. You can't set per-user or per-group permissions using default tools.
What you'll probably want is this:

# chmod 0744 file
# chown user2:group2 file