"what should be the monitor for it", this depends on your requirements, but in the pool configuration under advanced settings you can specify what is the number of monitors that should be up for the member to be marked up. The setting entry is called "Availability requirement" and you can tell the system to either require all the monitors to be up, or at least a number you specify. Default is all so this may be the cause of your members being marked down
If we specify some number and based on that only backend should be marked as down..
so let say if one only one member in LB goes down , LB will still send traffic to backend and user might complain that there connection isn't working.