The management of data while maintaining its utility and preservation of security scheme is a matter of concern for the cloud owner. In order to minimize the overhead at cloud service provider of applying security over each document and then send it to the client, we propose a layered architecture. This approach maintains security of the sensitive document and privacy of its data sensitivity. To make a balance between data security and utility, the proposed approach categorizes the data according to its sensitivity. Perseverance of various categorization requires different algorithmic schemes. We set up a cloud distributed environment where data is categorized into four levels of sensitivity; public, confidential, secret, top secret and a different approach has been used to preserve the security at each level. At the most sensitive layers i.e. secret and top secret data, we made a provision to detect the faulty node that is responsible for data leakage. Finally, experimental analysis is carried out to analyze the performance of the layered approach. The experimental results show that time taken (in ms) in processing 200 documents of size 20 MB is 437, 2239, 3142, 3900 for public, confidential, secret and top secret data respectively when the documents are distributed among distinct users, which proves the practicality of the proposed approach.