Labor Secretary Raymond J. Donovan's construction company asked a federal court in New York yesterday for an emergency order to block its possible indictment in the Bronx on charges of grand larceny, tampering with public records and other state violations.

Prosecutors for Bronx District Attorney Mario Merola acknowledged that a state grand jury investigation involving Donovan's firm, Schiavone Construction Co. of Secaucus, N.J., has been under way for more than a year as the outgrowth of an unsolved 1978 murder.

Theodore Geiser, Schiavone's chief lawyer, argued that the inquiry should be halted because two federal grand juries have probed alleged ties between Donovan and organized crime and found insufficient evidence to warrant his prosecution. Geiser maintained that, if any crimes are to be prosecuted in the case, the federal government should handle them.

In response, Merola's assistants said Leon Silverman, the special prosecutor who handled the federal inquiry, had "one mandate, and one mandate only: alleged crimes by Raymond Donovan."

Silverman's inquiry "certainly didn't include crimes by any other person and certainly not state crimes," Stephen Bookin, head of the Bronx district attorney's felony bureau, said he told the court.

U.S. District Court Judge Leonard Sand said after a late-afternoon hearing in Manhattan that he would rule at 2 p.m. today on the company's request for a temporary restraining order.

According to the company's petition and attached exhibits, the Bronx probe started as an investigation of the 1978 murder of Salvatore (Sally Blind) Frascone, a reputed member of the Bonnano family of the Mafia.

He was shot down Sept. 22, 1978, after walking out of a social club in the south Bronx.

Law enforcement sources said the killing came after a gangland "sitdown" involving the disputed takeover of a Schiavone subcontract on a subway project in Queens by William Masselli, a reputed member of the Mafia's Genovese family.

Masselli, who had just started a Bronx-based excavation company called Jopel Construction and Trucking, pushed aside a firm owned by Louis Nargi, triggering protests from Nargi's benefactor, Frascone, according to sources.

The "sitdown" reportedly resolved the dispute in Masselli's favor, but Frascone complained until he was killed, the sources said.

Bookin and Stephen Kartagener, head of the Bronx district attorney's appeals bureau, indicated yesterday that the investigation led prosecutors to examine payments to the Masselli company as a minority business contractor for Schiavone on such subsequent subway projects as the 63rd Street tunnel under the East River.

Beginning with that project, the New York City Transit Authority, which is in charge of construction, came under federal law requiring that 10 percent of a project's value go to minority-owned firms. The Bronx prosecutors said they suspect that about $8 million allegedly paid to Jopel was based on false statements and phony billings.

"It's all in the court papers filed by Geiser ," Bookin said after the hearing. "Everything I can't say, he said."

At the hearing before Sand, Bookin said evidence in the case includes FBI tapes of Masselli's warehouse during a 1979 investigation of his operations and other documents compiled during Silverman's inquiries.

"We didn't go looking," Bookin asserted. "Federal law enforcement personnel had informed us of evidence in possession of the federal government related to a local homicide Frascone , and that led us to the possibility that the motive might have been connected to the activities of the minority business enterprise."

Geiser said he first learned of Merola's investigation, said to be "99 percent complete," in a telephone call from Bookin Aug. 29. The prosecutor said he had been seeking waivers of immunity from company president Ronald Schiavone and other company executives in case they wanted to tell the Bronx grand jury their side of the story.

Geiser told reporters in New York that Donovan, former executive vice president of the company and one of its principal owners, had also been invited to testify. In a statement, Donovan called the investigation "a rehash of old charges" and said he is "exasperated."