To create a running list—a list that is interrupted by other paragraphs or that spans multiple stories or documents—create a paragraph style and apply the style to paragraphs that you want to be part of the list. For example, to create a running list of the tables in your document, create a paragraph style called Tables, make a defined list part of the style, and then apply the Tables paragraph style to all paragraphs you want in your Table list.
Whats happening is that the first set of NUMBERING (including sub numbering) i.e for 1.0 HEADING 1 is coming PERFECTLY as numbered. I hit "enter" at any level of numbering, word automatically puts the next number below that number. However for the rest of the headings such as 2.0 and 3.0, where there should be 2.1 there is 1.1, where there should be 2.2, its 1.2 and so on and so forth. Same for 3.0 and its numbering subsets.

While InDesign veterans may assume everyone already knows this, I can assure you I have worked with very sophisticated documents from designers who did not take advantage of this basic feature. A good rule of thumb to keep in mind as you tackle InDesign challenges is this: If it’s repetitious, tedious, or time-consuming, there’s probably a built-in solution right there in the program. You just need to go look for it.
Do not let me lead you into a headache under false pretences: this FAQ is not going to tell you how to fix a document that contains broken numbering. It simply explains how the numbering works: this is valuable information if you work with Word a lot, and by understanding it, you can often work out how to fix a document. However, this FAQ is not going to tell you how.  (For a discussion of methods, see: List Restart Methods).
You will occasionally want to place an unnumbered paragraph in the middle of a sequence, but the moment you hit Enter, another paragraph number pops up. To fix this, toggle paragraph numbering off by pressing the paragraph numbering button you used for the previous paragraph. (If you use the button’s drop-down, choose None as the numbering scheme.) Unfortunately, the paragraph settings won’t revert to Normal here; it’ll usually have the paragraph indented 0.25. Use the keyboard shortcut CTRL+Q to strip paragraph settings out, then revise the formatting as you wish. numbering in coreldraw