But floor is a physical object and it is also evident that actually the floor is at the bottom but the particles are detecting it way above. Shouldn’t the particles respect the physical object nevertheless? For instance if I am to move only the water source and not the floor, isn’t that achievable?
That’s because of how the box2d physics work.
“When you turn a display object into a physics object, the physics engine “owns” the object and has its own rules about the object. The engine also assumes that the anchor point is at the center of the object.”
https://docs.coronalabs.com/api/library/physics/addBody.html#gotchas
The underlying physics bodies don’t actually move like they might seem to when you move the display group around.
“It is valid to move, scale, or rotate a series of groups in unison or lock-step as long as these groups maintain the same coordinate origin, angle, and scale. However, if groups are moved, scaled, or rotated independently of each other, the Box2D collision system will consider the physics bodies to be in their original state, not as they appear as a result of transforming the group.”
https://docs.coronalabs.com/guide/physics/limitations/index.html
Yeah moving the group wouldn’t affect physics. The problem is we don’t have the reference of each physical particle as we do for traditional physics objects. So the particles are not in complete control and once spawned you can’t manipulate their movement. The only thing feasible is move the entire display group which does not respect physics. I’m stuck in a deadlock here, should have anticipated this earlier but never mind I’ll see what I can do. Anyway appreciate your effort XeduR. 
If you move the entire group, then it doesn’t matter because the physics references are still correct. You only run into issues if you decide to move some parts of the group and not others, because then the physics references are no longer correct.
I have no idea what sort of game you are working on, but most likely you can just get away with the sample code. Where would you have an instance where you need to move the display group, but not a single part of it, given that they are all a part of the same group and all have physics bodies? If you need to only move some objects, then move those objects individually (while keeping the physics limitations in mind).,
Yeah I’ll be taking that route eventually. Mine is a complete physics base scrolling game and I’m moving the obstacles individually and not by group. Now to accommodate physics particles I have to break the entire convention that I’ve been following. It’s fine I’ll keep this restriction in mind for my future projects.