What's in the distrib directory? Oracle E-Business has it's own forum space. I suggest you ask there. As far as I know, no Oracle database software should ever be installed as root, and only root should belong to the root group.
EBusiness Suite can be installed on your preferred path; that said, the installation has to be done with an account different from "root" (like "oracle") and has to be dedicated to Ebusiness Suite itself.
If you want to use that specific folder (distrib) just change the ownership of the same to user "oracle" and group "<oracle-is-part-of>"; getting "oracle" part of "root" group is not a valid option.
In distrib are oracle homes:
ls -l /u01/product/oracle/distrib
drwxr-xr-x 3 root system 256 May 26 2016 ora11204
Ok other than installation question what is the answer to :
If we add oracle user to root group , will it be able to create a folder in distrib which belongs to root/system?
Installation Guide: Using Rapid Install
Release 12.2 (12.2.0)
Part No. E22950-33
Log in as root to run Rapid Install.
No, this is not how it works
Root user is required just because you're going to use two different users for apps and db installation and "root" will use those to get the software installed.
Then in our case we should log in as root to install R12.2.
Yes, but root will use the "apps" or "database" account to then install the software; so this is why you have to change folder permissions.