Acknowledgment and authors in article based on PhD thesis A friend of mine finished his PhD and joined our group, on a project closely related to his PhD work. After three months, we submitted an article which includes significant  amount of work from his thesis and also the work done the last three months in our group. 

But his PhD supervisor got angry and said he can not add any other author except himself and he demanded that the acknowledgment should only be based on funding information which he will provide.

The article includes some experimental work which was conducted by my friend after joining our group. We offered the professor to add his and our both funding acknowledgment, but he did not agree. 

Is he right in his demands? 

Moreover, my friend said his supervisor rejected the publication draft by saying it’s not worthy to be published.
My understanding of the current situation:  

Your friend is attempting to publish what sounds like a significant portion of results from their dissertation, along with some new results obtained after a few months in a new research group (your group). Further, your friend's former PhD advisor does not approve of the new collaboration with your group, is not satisfied with whatever compromise you've proposed thus far, and does not want your group to submit the manuscript in question.


  Is [the former advisor] right in his demands? 


Unfortunately, there is no universally correct answer. Why? Simply put, the "correct" answer to this question depends on the norms in your field, the agreed-upon publication policies in your friend's former research group, and so on. (One of the key things I've learned on this site is just how much academia varies, and I strongly encourage you / your friend to reflect on this point as well; see, e.g., Academia varies more than you think it does).

Further, getting into philosophical debates about the "correct" way a former advisor should proceed in this situation is, in my view, pointless; before getting on to your question, let me explain why I say this. 

On this site, we see, time and time again, plenty of questions which are very closely related to the situation that your friend is currently in. Here are four such questions among many, and I strongly encourage you / your friend to take a look at these, too:


Authorship for paper based on my thesis
When should a supervisor be an author?
Co-authorship for not very involved supervisor
My advisor wants to co-author a paper on my thesis work, but drags out the submission, claiming it isn't ready. Should I submit without him?


As far as the "correct" course of action in the above / other related questions is concerned, the key takeaway (for me, at least) that all of these questions have in common is: it depends.

Now, on to your question. For simplicity, I see your friend's situation as belonging to one of the following two categories (below, since it is not clear in your question, when I write "norms," this will refer to the norms that exist for your friend, whatever that might entail):


If the "norms" are such that your friend is free to do whatever he wants with his research results, whether or not the results were obtained during his PhD, then your friend's former advisor has no grounds to halt publication, so long as the funding for the portion of the manuscript related to your friend's PhD results are acknowledged.
On the other hand, if the "norms" are such that your friend is required to consult with former PhD advisor on any collaborations, publications, etc. stemming from the research conducted while a PhD student, then your friend needs to sort this out with the former advisor ASAP. 


In an ideal world, if this second case applies to your friend, then your friend should have already had a discussion with the former advisor. In fact, what this question and the many other related ones help to underscore is how extremely important it is to have authorship discussions with your advisor early on. (This may seem obvious now, but I write this for future visitors to A.SE who are on the verge of finding themselves in similar situations.)