Submission of two papers in one conference?

There is nothing wrong or unusual in submitting two papers on a single conference. For specific detail you should refer to the conference author guide. In my experience, there exists an upper bound of papers (about 3-4), but I have never encountered a conference where only a single paper was permitted.

The acceptance or rejection is individual, every paper is peer-reviewed on its own account.

You should keep in mind that the conference will charge every paper separately. You should also watch the presentation schedule for any conflicts (though, they are very unlikely)

I wanted to know whether it is allowed and also plausible to submit two papers at the same conference?

Yes, it's generally allowed. (Unless the submission instructions explicitly forbid this.)

It's also plausible - it's even common. If your work is closely related to the scope of a particular conference, it's not uncommon for you to have multiple pieces of work to submit. (This is especially true if there are not many conferences in your subfield; you might choose to "save up" publications for a particular venue, rather than submit them somewhere else where they will be on the edge of the conference scope.)

Does the acceptance or rejection of one affect the acceptance or rejection of the other paper?

No, papers are generally reviewed independently and each submission of evaluated on its own merit.