Former Maryland state senator Clarence M. Mitchell III contended in federal court yesterday that his indictment in the Wedtech scandal must be dismissed because of "a blatant conflict of interest" on the part of Attorney General Edwin Meese III.

Mitchell and his brother, state Sen. Michael B. Mitchell, were indicted April 2 in Baltimore on charges of conspiring to block a congressional investigation of Wedtech by their uncle, former U.S. representative Parren J. Mitchell (D-Md.). Parren Mitchell, who has been described as an "unwitting victim" of the alleged scheme, had been inquiring whether Wedtech, a Bronx-based defense contractor, had received preferential treatment on minority business contracts because of intervention by White House officials.

Wedtech paid Michael Mitchell's Baltimore law firm $110,000 in 1984 and 1985 to intervene, the indictment charged. Clarence Mitchell allegedly got $25,000 of that amount.

On April 8, six days after the indictment of the Mitchell brothers was returned, Meese disqualified himself from all other federal investigations of Wedtech.

The attorney general, who had intervened on Wedtech's behalf in 1982 as a White House official and who later enlisted a Wedtech consultant to handle his own investments, has since come under investigation himself by independent counsel James C. McKay.

In seeking dismissal, Clarence Mitchell's attorney, Abbe D. Lowell, charged that the indictment had been "authorized by an attorney general whose own professional and financial relationship created a blatant conflict of interest resulting less than one week later in his disqualification from other Wedtech matters."

Lowell argued in an accompanying memo that "it is the appearance of impartiality" that is critical "and . . . the indictment must be dismissed regardless of the extent to which Mr. Meese was directly or indirectly involved in it."

Should the court decide that "the appearance of impropriety is not enough," Lowell said he would attempt to determine at evidentiary hearings starting Aug. 6 whether Meese "or other main Justice officials were involved in coordinating Wedtech-related inquiries" and whether U.S. Attorney Breckinridge Willcox's office in Baltimore was aware of Meese's Wedtech ties.

Justice Department spokesman Terry Eastland declined comment.

"We will respond in the normal course," he said. "It would be inappropriate to write our reply in the morning newspaper."

Justice Department sources said that ranking officials here are routinely alerted to forthcoming indictments in sensitive cases against high-ranking officeholders such as governors and members of Congress. But, the sources said, for lower-ranking figures, it is up to the U.S. attorneys in charge of the cases to decide whether to send in a report.

"That did not occur in this case," one senior Justice Department official said. "There was no contact {with Willcox} at all."

Lowell also submitted motions to dismiss four other indictments returned April 2 against Clarence Mitchell, contending that they were the result of a longstanding government vendetta against Mitchell that got out of hand.