Short answer: Yes, the idea that living creatures can be found “inside” inanimate matter (trees, earth, even stone) is old in India, and it is explicitly used in philosophical argument long before early modern Europe. However, earlier Indian texts do not, as far as we can securely document, single out the precise marvel “a live toad sealed in the heart of a solid rock.” What we do find well before the 13th century are (a) the general doctrine that some beings arise from moisture or from the earth (spontaneous generation), (b) frequent references to wood-boring worms “in the heart of trees,” and (c) Jain classifications that expressly recognize life-forms whose bodies are “earth” (which includes clay, sand, and stone). All of these make Aruḷnandi Śivācārya’s 13th-century example intelligible in its Indian context.

What can be documented earlier than the 13th century

• The four modes of birth and spontaneous generation

  • Buddhist canon: the stock formula “Four kinds of birth: egg-born, womb-born, moisture-born, and spontaneously generated” (Pali: aṇḍajā, jalābujā, saṁsedajā, opapātikā) occurs repeatedly; see e.g. Dīgha Nikāya 33, Sangīti Sutta (standard English translations are readily available via SuttaCentral/Access to Insight).
  • Hindu law/purāṇic literature: the same fourfold division appears in early texts such as the Manusmṛti (e.g., 1.46 in Georg Bühler’s translation, Sacred Books of the East 25), and in the Viṣṇu Purāṇa (Book 1, early chapters in H. H. Wilson’s translation). “Moisture-born” and “earth-sprung/sprouting” categories were understood to include worms, insects, etc., that appear within wood, earth, dung, and the like.

• “Worms in the heart of trees” as a stock image

  • The phenomenon of wood-borers that live “inside” and destroy a tree from within is a very old Indian simile. It appears in early Tamil and Sanskrit moral/gnomic literature (e.g., classical Tamil uses the maram/kaṣṭha-puḻu “tree/wood-worm” image to speak of internal decay; similar images appear in Sanskrit nīti verses). This is an ordinary, pre-scientific observation of real insects; it’s not controversial and is far older than the 13th century.

• Beings in/with “earth-bodies” (including stone) in Jain doctrine

  • Jain texts classify living beings into immobile “body-types,” including earth-bodied (pṛthvīkāya), water-bodied, fire-bodied, air-bodied, and plant-bodied. The standard compendium, Umāsvāti/Umāsvāmī’s Tattvārthasūtra (e.g., 2.12–14, with classical commentaries), explicitly treats clods of earth, dust, sand, and stones as the loci of earth-bodied life. While this is not a “toad in a rock,” it does attest to an Indian intellectual tradition that recognized life within stone as a category.

What we do not (securely) find earlier than the 13th century

• A specific marvel-tale of “a live toad found sealed in the heart of a solid rock” in Vedic, epic, classical Sanskrit, Pali, Prakrit, or early Tamil sources has not, to my knowledge, been documented in printable, citable form. Aruḷnandi Śivācārya’s 13th-century passage is (so far) the earliest clear Indian statement I can point to that treats “toads in the heart of rocks” as a given.

How to interpret Aruḷnandi’s example

• Given the long-standing acceptance in India of spontaneous generation (moisture-born, earth-sprung) and the well-known reality of wood-boring insects, Aruḷnandi’s audience would have found “worms in the heart of trees” obvious, and “toads in the heart of rocks” at least plausible as an extension of the same worldview. Whether such toad-in-stone anecdotes circulated orally in South India before the 13th century cannot be ruled out; they simply are not (yet) attested in earlier written sources that can be cited with confidence.

Bottom line

• Yes, Indian literature before the 13th century clearly attests the underlying ideas (creatures arising within or from inanimate substrates, and creatures living inside wood); Jain doctrine even recognizes life in stones as a formal category. But a specific, earlier textual reference to live toads found sealed inside solid rock has not been securely identified; Aruḷnandi Śivācārya’s 13th‑century passage is the earliest explicit Indian reference I can presently document.