This appeal arises under Section 30 of the Workmens Compensation Act (for short the W.C. Act). The 1st respondent was employed as a Driver with the 2nd respondent to work on a vehicle bearing No.AP-02-U-5269. The vehicle is insured with the appellant. On 30-5-2004, the 1st respondent was on duty to drive the vehicle from Madanapalli to Pulivendla, and on the way, it dashed a tree, and he received certain injuries. He is said to have been treated at various hospitals. He filed W.C. Case No.2 of 2005 before the Commissioner for Workmens Compensation and Assistant Commissioner of Labour, Ananthapur, (for short the Commissioner), claiming a sum of Rs.4,00,000/- as compensation. He pleaded that he is unable to work normally, due to the permanent disability suffered by him.

2. The 2nd respondent remained ex parte. The claim of the 1st respondent was opposed by the appellant herein. It was pleaded that the policy does not cover the liability towards the Driver, since the stipulated premium was not paid. It was also urged that the claim made by the 1st respondent is exorbitant and cannot be entertained.

3. On behalf of the 1st respondent A. Ws.1 and 2 were examined and Exs.A-1 to A-5 were marked. On behalf of the appellant herein R.W.1 was examined, and a copy of insurance policy was marked as EX.B-1. The Commissioner took the loss of earning capacity (for short L.E.C.) of the 1st respondent as 100%, and awarded a sum of Rs.3,98,997/as compensation. The same is challenged in this C.MA.

4. Sri T. Mahender Rao, learned counsel for the appellant had advanced two principal contentions, viz., that Ex. B-1, policy, does not cover the liability towards the appellant, and that the assessment of LEC. of the 1st respondent at 100%, is contrary to the provisions of the Act and the record. He contends that unless a premium of RS.15/- is paid, the policy does not cover the liability towards the Driver. It is also his case that when A.W.2 certified the percentage of disability of the 1st respondent at 50%, there was no justification for the Commissioner in assessing or determining the L.E.C. at 100%.

5. Sri S.D. Goud, learned counsel for the 1st respondent, on the other hand, submits that the coverage of the liability towards a Driver, on a goods vehicle, is statutory, and no special premium is required to be paid for it. He urges that the requirement for payment of Rs.15/- as extra premium, is only to cover the liability towards an owner, if he incidentally functions as Driver, but where a third party is employed as a Driver, the liability towards him is covered by operation of the statute. As regards the loss of percentage of LEC., he contends that the Commissioner took into account, the settled principles of law and that no interference is called for.

6. In view of the submissions made by the learned counsel for the parties, two questions arise for consideration.

(a) Whether it is necessary for the owner of a vehicle to pay any extra premium to cover the liability towards a Driver of a vehicle, and

(b) Whether the Commissioner was justified in treating the loss of earning capacity of the 1st respondent herein at 100%.

7. The fact, that the 151 respondent was employed as Driver with the 2nd respondent, and that the vehicle driven by him met with an accident; was not seriously disputed. In fact, it was evidenced by the F.I.R., wound certificate, charge-sheet and disability certificate which were marked as Exs.A-1 to A-4. The insurance policy was marked as Ex.A-5, as well as Ex. B-1.

8. As a measure of social security, the Motor Vehicles Act (for short the M.V. Act) has made it mandatory that every motor vehicle must be covered by an insurance policy. Chapter-XI of that Act, comprising of Sections 145 to 164; deals with the requirement as well as nature of insurance, that must cover motor vehicles.

9. The liability, which a policy of insurance is excepted (sic. expected) to cover, is of three categories, viz., (i) the liability that will be incurred