Naidu,

just fyi : I got it working with this code : 

public with sharing class AutoCreateSubsTriggerTest {

    static testMethod void testAutoCreateSubs() {
        // First, set up your test User.
        User testUser = generateTestUser();

        // Generate your position but don't perform DML yet
        Contract_Overview__c contover = new Contract_Overview__c(Subsidiaries_On_Contract__c = testUser.Id);
 
        // Start your test and insert your contract overview
        Test.startTest();
        insert contover;
        Test.stopTest();

        // Get the subs from the DB to ensure they were created
        List<Subs_Serviced_On_Contract__c> subs = [SELECT
                                                 Id
                                             FROM
                                                 Subs_Serviced_On_Contract__c
                                             WHERE
                                                 Contract_Overview__c = :contover.Id
        ];

        // There should be 1 interviewer because only one user ID was provided
        //System.assert(1, subs.size(), 'One sub object is expected');
        System.assert(1 == subs.size(), 'One sub object is expected');
    }

    private static User generateTestUser(){
        // We use the System Admin profile because it will always be there
        Profile sysAdmin = [SELECT 
                               Id 
                            FROM 
                               Profile 
                            WHERE 
                               Name = 'System Administrator'
                            LIMIT 1
        ];
 
        // Generate the user
        User newUser = new User(
            UserName = 'unit.tester@example.com',
            LastName = 'Test',
            FirstName = 'Jane',
            CompanyName = 'TestCo',
            Title = 'Developer',
            Email = 'unit.tester@example.com',
            phone = '555-555-5555',
            MobilePhone = '555-555-5554',
            Street = '123 Fake Street',
            City = 'Los Angeles',
            State = 'CA',
            PostalCode = '12345',
            CommunityNickName = 'unit.test',
            Alias = 'abcd',
            ProfileId = sysAdmin.Id,
            emailencodingkey = 'UTF-8',
            languagelocalekey = 'en_US',
            localesidkey = 'en_US',
            timezonesidkey = 'America/Los_Angeles'
        );

        // Insert that user
        insert newuser;

        return newuser;
    }
}

 Thank you very much for your help & effort.