Socket not able to connect on EC2 instance

We have deployed our reactJS frontend, NodeJS backend and NodeJS chat(which uses socket programming for communication) on AWS using nginx as webserver. This is what I have added my /etc/nginx/nginx.conf file, I have changed the server name to <value> for confidentiality:

    server {
        listen 80;
        listen [::]:80;
        server_name <value>.in www.<value>.in;

        # Redirect all HTTP requests to HTTPS
        return 301 https://$server_name$request_uri;
    }

    server {
        listen 443 ssl http2;
        listen [::]:443 ssl http2;
        server_name <value>.in www.<value>.in;

        root /var/www/html/dist;
        index index.html;

        ssl_certificate /etc/letsencrypt/live/<value>.in/fullchain.pem;
        ssl_certificate_key /etc/letsencrypt/live/<value>.in/privkey.pem;

        # Load configuration files for the default server block.
        include /etc/nginx/default.d/*.conf;

        location / {
            try_files $uri $uri/ /index.html;
        }

        location /api {
            proxy_pass http://localhost:5000;
            proxy_set_header Host $host;
            proxy_set_header X-Real-IP $remote_addr;
            proxy_set_header X-Forwarded-For $proxy_add_x_forwarded_for;
            proxy_set_header X-Forwarded-Proto $scheme;
        }

        location /socket {
            proxy_pass http://localhost:3001;
            proxy_redirect     off;
            proxy_set_header   Host $host;
            proxy_set_header   X-Real-IP $remote_addr;
            proxy_set_header   X-Forwarded-For $proxy_add_x_forwarded_for;
            proxy_set_header   Upgrade $http_upgrade;
            proxy_set_header   Connection "upgrade";
        }
       }

Our frontend, backend and chat is deployed on t2.medium EC2 instance. It is working fine on my local but the chat socket is failing to establish a connection from the frontend client to socket server. I have done all the configuration and I am really clueless what can be done next. Here is what I have done apart from the config:

1. I have allowed all traffic in my security group
2. My port is open, since I am able to telnet via the port. What could I be doing wrong here? Am I missing something?