Thanks for the reply. My apologies that I'm not completely familiar many of the physical and numerical issues while simulating bbh. I have experience in AMR astrophysical simulations.
When I do the bbh simulation of ratio around 1, it evolves perfectly fine. With higher mass ratio, the smaller BH just becomes bigger and blows up. I'm assuming this as a problem of refinement.
My naive picture was that the grid is created adaptively at every n time step(a parameter) based on lapse values. After locating the horizon, dynamic variables are updated in the outside region only. So, the problem remains with locating the horizon often enough and refining to the appropriate level so that at least 4-5 cells remains across a BH.
Please correct me, if I'm off by any big misunderstanding.