Is this possible in linux? :

Users A, B and C are part of group W,
Users D, E and F are part of group X,
Users G, H and I are part of group Y

Folder K is created and the group W needs to have read access to this folder, group X needs to have read-write access and group Y is not allowed to read the folder.
When user E (or D or F) creates a subfolder L in folder K, the group W must be able to read this subfolder and all his files also.

How can you setup the correct permissions on folder K without using POSIX ACL's?

Is this a homework question? If it is, you'll learn more by working and solving the question on your own, which our rules states members here are not obligated to do your homework for you. If this isn't homework, my apologies, along with a, good luck/might want to rephrase your question so it doesn't look like a test question straight from a book or something like that.

No it's not a homework question. I am busy with setting up a file server and users must be able to connect using ssh and samba from windows without be able to view 'secret' data from other research groups. Data is spread over different servers, exported and mounted via NFS. That's the reason why I didn't wanted to use ACL's because if we don't log everything it gets a bit messy. Unfortunately I can't find a way to solve this without ACL's.

PS: I am not going to rephrase the question because it is looks like a test question from a book. It is what we want to implement but nobody could give us a clear answer if it's possible. I actually would very much want it to be a test question from a book because then we could read the answer in the back of the book ;-).

the solution:

Create Group Z with groupmembers W+X
Create folder J with permissions read-only for members Z
set correct permissions

drwxr-x--- root:Z J
|_ drwxrwxr-x root:X K
|_ drwxr-xr-x E:X L