Submitting a paper to a conference whose scientific committee includes an academic from a grad school you want to enroll I am planning to submit my paper to an international conference. The level of the conference might be high considering my paper and for my academic background at the moment. My paper can fit in one of the poster sessions though. 

However, the scientific committee includes one academics who belongs to one of the top graduate schools in my field, which I want to apply in a few years. In case of a rejection of my paper to that conference, I do have some concerns if that academic person remembers my name, my institution etc. and hold some negative bias during my graduate application (one MPhil programme)?

Should this possibility of rejection of my paper discourage me and should not I submit my paper due to this fear?
The chance that a rejection would have this impact on your graduate school application is extremely low.

First, check how many members the program committee has, and realize that only 1 - 3 of them will look at your paper at all during review. Second, even if the paper is rejected, there is a chance that the person handling the paper will have forgotten about the details after a year or more. Third, even if they remember, they may not hold it against you, especially if the conference is very competitive, but rather look at the positive things you show in your application.

On the other hand, think about how acceptance of your paper would later on increase your chances of getting admitted to this graduate school! This would be something that you put in your application anyway, so there's no problem with it being forgotten, and it will make a positive impression even if that particular committee member was not the one to handle your paper. It is definitely a "risk" worth taking!