Cloud computing models stores data and computing resources in virtual servers located in large data centres' and are managed using a centralized architecture. Distributed cloud uses resources provided by users who are geographically distributed over a large area. Distributed cloud is completely decentralised and resources are provided in a P2P fashion. This model of distributed cloud is based on mutual benefit for users and is free of cost. Distributed cloud provides all the services provided by regular cloud computing models. Since the resources are provided by regular users, security and privacy for data, storage and computing resources are main concerns. In this paper we propose a privacy preserving storage and file sharing mechanism among different users in a distributed cloud. This mechanism involves processing, storing and retrieval of encrypted data in a secure and privacy preserving manner.