Answer
There is a very ancient tradition in Sanatan Dharma of speaking the truth and honoring truth, and truth has been given a place among the highest values of life. Speaking the truth is indeed Dharma.
The scriptures say that those who always speak the truth develop such power in their speech that whatever they utter to anyone comes to pass — whether they speak something good or something ill. Let me give you two examples of this.
You must have heard the story of King Parikshit and how he met his death. King Parikshit went hunting in the forest and struck a deer with his arrow, but the deer escaped. Searching for the deer, Parikshit arrived at the ashrama of Rishi Shamika. The sage was seated in deep meditation. Parikshit asked him several times whether he had seen the deer, but the sage gave no reply. The king became enraged. He looked around and saw a dead snake lying nearby. He picked up the snake and placed it around the sage's neck, then left. When the sage's son, Rishi Shringi, arrived and saw his father thus insulted, he was filled with fury. He inquired of people how this had happened and was told the story. Thereupon he cursed King Parikshit, declaring that on the seventh day from that moment, the king would die from a snakebite. Shringi's father was a calm and gentle sage. He told his son to retract his curse, saying that he had committed a grave act. But Rishi Shringi replied that he had never spoken an untruth in his entire life, and therefore his spoken word could not become false — nor did he have any means to revoke it. Such is the glory of truth.
And we know that despite every precaution, King Parikshit died on the seventh day from a snakebite.
Let me tell you another account — this one concerns Vedavyasa. Once, he blessed Gandhari, saying she would have one hundred sons. Gandhari conceived, but ultimately she had a miscarriage. From her womb emerged a lump of flesh, yet no sons were born.
She went to Vedavyasa and said: You blessed me that I would have a hundred sons, yet this miscarriage has occurred.
Vyasa told her: Devi, I have never spoken an untruth in my life, not even in jest. Therefore, my word simply cannot prove false. This is the glory of truthfulness. You shall indeed have one hundred sons. He then prescribed a method through which, from that very lump of flesh, one hundred sons were ultimately created.
I gave the above two examples so that one may understand that speaking the truth is a supreme Dharma and that tremendous power resides within it.
But now let me explain to you that while truthfulness is indeed a most important general Dharma, there are two types of Dharma: Samanya Dharma (general Dharma) and Apad-Dharma (Dharma in times of crisis). In times of distress, deviating from general Dharma is also considered Dharma, provided the purpose is deeply righteous. This is why the Mahabharata declares: 'Sa eva dharmah so adharmo desha kale pratishthitah' — meaning, depending on the time and circumstance, sometimes Dharma itself becomes Adharma and Adharma becomes Dharma. Therefore, in extraordinary circumstances, to save someone's life or for someone's ultimate welfare, even speaking an untruth can be Dharma. However, using this principle as a pretext to lie every day or every few days is not acceptable.
Shri Krishna's Harmonization of Truth and Righteous Conduct:
Just before the Mahabharata war began, Arjuna was caught in a moral dilemma. He said to Shri Krishna — 'O Madhava! How can I be happy after slaying these elders, grandfathers, and kinsmen? Even if this is a Dharma-Yuddha, is such terrible violence justified?' Shri Krishna explained that truth is a great virtue, and non-violence (ahimsa) too is a revered Dharma, but if Adharma is prevailing, if the innocent are being destroyed, if patience and mercy are being mistaken for weakness — then remaining silent or inactive is itself the greatest Adharma.
In this very context, Shri Krishna said to Arjuna:
'Sukha-duhkhe same kritva labhalabhau jayajayau. Tato yuddhaya yujyasva naivam papam avapsyasi.' (Gita 2.38)
Meaning — if for the sake of Dharma one must wage war and commit violence, then do so with equanimity; no sin will accrue from it. Here Shri Krishna is not saying that violence is a good thing — rather He is saying:
'Truth and non-violence are Dharma only so long as they do not abet Adharma. And if harsh action must be taken to oppose Adharma — then that itself becomes the supreme Dharma.'
Viewed thus — truth and non-violence are great Dharma, but their wise application in accordance with circumstances is true wisdom. If speaking the truth would cause harm to someone, it is better to remain silent. If one must occasionally speak an untruth to protect someone — even that untruth can become Dharma. And if one must fight against Adharma — that too becomes a Dharma-Yuddha (righteous battle).