Haptic enabled virtual reality surgical simulators are increasingly replacing more traditional training tools in teaching hospitals. Development of these simulators may be greatly facilitated using physics libraries such as NVIDIA's PhysX. While volumetric models of soft bodies may be easily generated and simulated using such engines, it is not straightforward to develop complex surgical tasks such as surgical cutting and hence novel algorithms are necessary. Electrocautery is a tissue cutting process used in surgery to burn away soft tissues by localized heating using a specialized probe. Unlike typical surgical cutting with sharp instruments, the electrocautery process depends upon the duration of the tool tissue contact and the rate of heat conduction. The simulation of electrocautery depends on understanding the physics of heat conduction as well as empirical measurements of temperature in the tissue. In this paper we report a physics-based paradigm for the simulation of electrocautery procedures that can directly work on volumetric objects. Based on the solution characteristics of the conduction equation and empirical observations using a thermal imaging camera, we manipulate only the tetrahedral mesh vertices that are inside a sphere of influence whose centre is located at the tip of the electrocautery tool and which expands as a function of time. A 3D orthogonal plane is used to split the tetrahedral mesh vertices along the three Cartesian directions. Examples are provided from a realistic surgical simulation environment.