In this paper we propose an algorithm for tracking multiple ROI (region of interest) undergoing non-rigid transformations. Demon's algorithm based on the idea of Maxwell's demon, has been applied here to estimate the displacement field for tracking of multiple ROI. This algorithm works on pixel intensities of the sequence of images thus making it suitable for tracking objects/regions undergoing non-rigid transformations. We have incorporated a pyramid-based approach for demon's algorithm computations of displacement field, which leads to significant reduction in the convergence speed and improvement in the accuracy. This algorithm is applied for tracking non-rigid objects in laproscopy videos which would aid surgeons in Minimal Invasive Surgery (MIS).