Yes definitely one can switch the domain for lateral entry into Degree course from diploma.

You can take up Mechanical engineering for sure.
All students from Engineering get to choose their Specialization from secind year itself, so you can definitely switch your domain.

You must although qualify with bekow mentioned eligibility criteria:-
1. Candidate must have valid diploma certificate in his herbranch of Specialization
2. They can take part in lateral entry for degree on basis of their diploma performance and seats are allotted accordingly.
However, some colleges conduct lateral entry tests as well for admission ibto second year of Engineering for diploma holders.

Hope above solutions solve your doubts,feel free to revert incase you have querries..!!!
All the best..!!!